Santander is dividing its banking empire into nine autonomous groups, with Portugal being one of them.
Preparing for the next crisis, the Spanish bank, run by Ana Botin, aims to create a more robust geographical structure should one of the new regional businesses suffer insolvency.
These legally autonomous divisions will deal with the controlling central banking regulators in their areas and wqill work with them to devise any necessary ‘resolution’ without affecting the overall business.
Each new ‘resolution group’ will have to meet specific criteria, including capital ratios, should have enough resources to keep itself out of trouble and is under no obligation to bail out other of the regional Santander businesses.
"There are no legal commitments that imply financial support," reads a company notice, adding that inter-company loans will be at the applicable market rates.
The group in Spain will be the largest one, with assets of €651 billion.
In order of decreasing assets, the remaining units will be: United Kingdom (€361 billion), Brazil (€162 billion), the United States (€114 billion), Mexico (€58 billion), Chile (€50 billion), Portugal (€48 billion), Poland (€32 billion) and Argentina (€13 billion).
The Spanish group also has the highest solvency, with a capital ratio of 24.12% compared to the Portuguese business at 18%.
Comments
Hmm.
You have got that right Darcy. Food banks are over whelmed in northern cities. Also unknown to many are the families living in
in caravans on year round caravan parks.
Its a bloody disgrace.
While you were being been smug about banking in other parts of Europe and spelling out that Portugal was still experiencing difficulties with borrowing as a result of the financial crisis of 2007, let me remind you that Britain also suffered huge loses as the British banks had to be bailed out to the sum of 500 billion pounds and British citizen, particularly on Northern Britain have been suffering as a result of this ever since.
Interest rates for savers has been held at next to nothing for more than a decade. In fact we are not out of the last crisis but are just waiting for the next, Santander know this
and are limiting there potential exposure. The calm before the storm comes to mind.
I think you should be aware that all banks in the European Union are regulated by the ECB, European Central Bank. So the highly regulated banks in the UK are regulated to the same standard as the banks in Portugal.
https://www.lovemoney.com/news/15729/who-owns-your-bank-or-building-society
Bloomberg today explains what lies behind Santander's move. The nightmare scenario of sovereign debt triggering Eurowide collapse. In that the ECB enthusiastically encouraged the PIGS (Portugal, Italy, Greece and Spain) central and national banks to buy their own countries (sovereign) debt. To avoid the embarrassment of not getting interest elsewhere. So, if borrowing rates rise too far, as Italy's have done recently, it is not commercially viable for the Bank to be servicing their own countries debt. Hence German twitchiness about rescuing entire EU countries - Portugal being the 3rd most indebted and the public debt still rising every month.