Not surprising news really. When you’ve been in denial for so long this is what you should expect. Spanish banks lost as much as 8 percent at Monday’s market opening (before recovering later) after the government announced the first intervention in a Spanish bank since 1993. The euro was also down 0.9 percent on the day at $1.3177 at 12:000.
Spanish banking stocks plunged Monday as a banking bailout announced this weekend indicated the country’s financial sector may not be as immune to the current financial crisis as previously thought.
The Bank of Spain has taken over management of small savings bank Caja Castilla La Mancha and will provide it with as much as EUR9 billion of liquidity, the government said Sunday.
Stocks in Banco Santander SA (STD) fell 5.6% to EUR5.04 at 0749 GMT, while rival BBVA (BBV) was down 4.4% to EUR6.05, and Banco Popular SA (POP.MC) fell 5.5% to EUR4.68, pressuring the IBEX-35, which declined 3.1%.
Spanish Finance Minister Pedro Solbes Sunday said the intervention in Caja Castilla La Mancha was an isolated case, and that the overall Spanish banking system remained “extremely healthy.”
Yet some analysts are not convinced. “This intervention supposes that the Spanish financial system isn’t immune to the international situation,” Banesto analyst Ignacio Soto Palacios. “We expect a bad performance of the sector in the short run.”
In the short run, in the medium run, and in the long run, if I may be so bold.