Comments on: Spanish Banks: Well Regulated but Still Suffering http://www.irisheconomy.ie/index.php/2008/12/15/spanish-banks-well-regulated-but-still-suffering/ Wed, 16 May 2012 21:22:23 +0000 http://wordpress.org/?v=2.6.3 By: Patrick Honohan http://www.irisheconomy.ie/index.php/2008/12/15/spanish-banks-well-regulated-but-still-suffering/#comment-30 Patrick Honohan Mon, 15 Dec 2008 23:10:30 +0000 http://www.irisheconomy.ie/?p=71#comment-30 The relative caution of the Spanish regulators (and the big banks) presumably reflects their own relatively recent homegrown banking crisis -- the so-called Rumasa affair of the early 1980s. It is certainly praiseworthy (though not unique) that they avoided off-balance sheet vehicles. I like the Bank of Spain's statistical provisioning. (I've been recomending countercyclical bank regulation since 1995). But let's not get carried away. For one thing, it may have had the effect of reducing specific provisions by the banks, and for another, it's not big enough to achieve the sort of increases in bank capital that are really needed. The FT story ends with a box on the regional savings banks (Cajas). That looks like where the interesting action will be. The relative caution of the Spanish regulators (and the big banks) presumably reflects their own relatively recent homegrown banking crisis — the so-called Rumasa affair of the early 1980s.

It is certainly praiseworthy (though not unique) that they avoided off-balance sheet vehicles.

I like the Bank of Spain’s statistical provisioning. (I’ve been recomending countercyclical bank regulation since 1995). But let’s not get carried away. For one thing, it may have had the effect of reducing specific provisions by the banks, and for another, it’s not big enough to achieve the sort of increases in bank capital that are really needed.

The FT story ends with a box on the regional savings banks (Cajas). That looks like where the interesting action will be.

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