Spanish savings bank, CajaSur, is controlled by the Roman Catholic church and was seized by The Bank of Spain on Saturday following defaults by borrowers with property loans. Based in Cordoba, regional bank CajaSur, which has a loan portfolio of $16.36 billion and assets of $23.9billion, was said to be in jeopardy of failure.
News of the seizure led to the erasure of last week's Euro advances against the dollar, as currency traders worried that European financial institutions still face the prospect of losses from Greek debt holdings so decided to dump their currency holdings of Euro.
A report in BNP Paribas - Bloomberg and Barclays - yesterday advised traders to buy Norwegian Euro Krone instead.
This is the second Spanish bank to be seized since the property bubble burst, the first in March 2009 of Caja Castilla-La Mancha, and has prompted international concerns about Spain's credit worthiness, which coupled with Greece's problems, has made the markets somewhat jittery about buying Euro.
FT.Com
Wall Street Journal: IMF Urges Spain to Cure Its Ailing Economy
The International Monetary Fund issued an unusually blunt warning to Spain that it needs a "radical overhaul" of its labor laws, a "bold" reform of its government pension system and accelerated consolidation of its banks to stave off the kind of economic problems that have undermined Greece. "Time is of the essence," the IMF said in a statement issued after its economic team finished an annual review of Spain's economy. The IMF didn't release the full report of its findings, which will be discussed at the IMF board meeting next month. The review came as Spanish central bank officials took over ailing CajaSur, a mutually owned savings bank that holds 0.6% of the banking system's assets. Central-bank officials dismissed CajaSur's management and tried to reassure nervous local depositors that their savings are safe.
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Wall Street Journal: IMF Urges Spain to Cure Its Ailing Economy
The International Monetary Fund issued an unusually blunt warning to Spain that it needs a "radical overhaul" of its labor laws, a "bold" reform of its government pension system and accelerated consolidation of its banks to stave off the kind of economic problems that have undermined Greece. "Time is of the essence," the IMF said in a statement issued after its economic team finished an annual review of Spain's economy. The IMF didn't release the full report of its findings, which will be discussed at the IMF board meeting next month. The review came as Spanish central bank officials took over ailing CajaSur, a mutually owned savings bank that holds 0.6% of the banking system's assets. Central-bank officials dismissed CajaSur's management and tried to reassure nervous local depositors that their savings are safe.
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