LTRO for bullfights-In Spain everything is possible
Another day on the Iberian Peninsula. The Trader has been writing extensively on the Spanish situation over the past year. The problems are now getting increased focus by investors, and we expect the Spanish situation to go much more intense over the coming months. The Spanish unemployment, debt levels, etc are one part of the problem, the other side is whether or not people actually know what is going on. “They” tell us the debt ratios are under control, buy simple not adding all relevant items. “They” tell us properties have bottomed out, but still there is probably over a million empty homes. “They” tell us the LTRO is great for the Spanish banks, but they use it for loans to bullfighting tickets. Espana, everything under the sun, especially indebted bullfighting tickets. From WSJ.
But by granting the new lease on life, the ECB program also has enabled the industry to delay its cleanup process, according to some bankers, investors and other experts.
“The LTRO has allowed for an extension of the period before which bank reconstruction is embraced, and the damage for the euro area could be material,” said Alastair Ryan, a banking analyst with UBS.
The tactics are most prevalent in Spain, where banks are awash in ECB loans but also are buckling under the increasing weight of bad real-estate loans. Lenders are making accommodations to small- and medium-size borrowers that take immediate heat off their customers, but possibly only kick problems to a later date.
Consider the plight of many Spanish bullfighting companies. With the economy in a deep slump, they have been struggling to fill seats for the usually popular events. Organizers are struggling to pay for marketing and bull-ring maintenance, according to bullfight companies and their trade organization, who also said some are increasingly at risk of defaulting on loans with local banks.
So earlier this year, a Seville bullfight company, Empresa Pagés, struck an unorthodox deal with its lender, Banca Civica, soon to be part of national giant CaixabankCABK.MC +0.62% SA. The bank agreed to lend money to cash-strapped bullfight fans to help them buy season tickets, which cost several hundred euros apiece. Empresa Pages gets the ticket revenue upfront. The fans generally need to repay the loans, with interest, within a year.
Full article here.