Spain announced on Friday drastic reforms forcing banks to set up a new 30 billion euro (US$39 billion) financial cushion and to remove risky property assets from their accounts.
Spanish Prime Minister Mariano Rajoy’s government took the sweeping action just two days after it nationalized the fourth-biggest bank, Bankia, to salvage a balance sheet dripping in red ink.
Madrid will charge two independent auditing firms with valuing banks’ exposure to the collapsed property sector, still reeling from a housing bubble that popped in 2008, ministers told a news conference.
Photo: Reuters
“The government wants complete transparency, clarity is crucial to end any doubt about Spain’s solvency,” Spanish Economy Minister Luis de Guindos told the conference after a Cabinet meeting.
At the same time, the minister stressed that the reforms will not be funded with taxpayers’ money, thus preserving Madrid’s efforts to rein in mushrooming state debt.
Bankia, in which the state is taking a 45 percent stake as a crisis measure, had 37.5 billion euros in exposure to the property sector at the end of last year.
Of that total, loans worth 31.8 billion euros were classed as problematic.
The hangover from the property sector crash extends across the financial sector.
Bank of Spain figures show the commercial banks held problematic real-estate assets, including loans and seized property of 184 billion euros, 60 percent of their property portfolio at the end of last year.
The country “faces one of the most difficult moments in its history,” Spanish Deputy Prime Minister Soraya Saenz de Santamaria said.
The extra provisions of 30 billion euros demanded from the banks will apply to all property-related assets, including those not yet classed as being problematic, ministers said.
That figure is in addition to 53.8 billion euros the banks were told to set aside in the last reform package, in February.
Overall, the provisions would bolster coverage of property-related assets to 30 percent, from 7 percent.
Banks will finance their own provisions, or turn to loans from the state-backed Fund for Orderly Bank Restructuring carrying an interest rate of 10 percent, the government said.
“This type of injection of money is not public aid,” the economy minister insisted.
Moreover, banks are being forced to remove seized property-related assets from their balance sheets and place them in specialized agencies, allowing them to fix a fair price.
“This will be compulsory for all entities,” said De Guindos, a departure from earlier assurances by government officials that the measure would be voluntary.
The European Commission meanwhile said Spain would miss by a wide mark its effort to cut the public deficit from 8.5 percent of GDP last year to 5.3 percent this year and 3.percent — the EU limit — next year.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the