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International Banking System

España
by

Daniel Toquero

on 12 August 2012

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Transcript of International Banking System

SPANISH BANKING SYSTEM Starting Point -Building sector Differences -Focus on commercial bank -Securitization -Deposits funds -Strength in balance -No toxic assets The euro allow the lowest interest rate in the history of Spain. Evolution of Euribor in Spain 1985-2010 Development Model Consecuence of both previous effects In the last years, great part of the international system banking has changed the business model towards a "CREDIT CREATION MODEL" and “RISK TRANSFER MODEL”. The Spanish system banking has maintained the classical business model in retailer banking . Spain has been one of the countries where more the securitization has been developed during the last years. The Spanish banking system took the role like intermediary of investment funds and pension funds. Important credit when the system needs credit in long term. In Spain the 97% is fixed-rate mortgage It is the European country with the highest level of provisions. The Bank of Spain was NOT ALLOWED credits transfers without risk transfers.

So financial institutions have continued to make GOOD RISK ANALYSIS before to grant funding.

In fact, the SUB-PRIME segment has not been developed in Spain -The Euro -Exterior sector dependency The reallity And now... If the crisis is different...What is the real problem? Over-leaverage Decrease i% Increase over-indebtedness Housing bubble. Housing Bubble International credit housing redemption Spanish economic Crisis But the ECB offers a float But the Spanish model used for securitization is different from the American model:

1.In Spain, the securitization has been developed with the objective of get LONG TERM CREDIT. Without carrying out a real transfer of the risk.

2.The development has been based on simple and TRADITIONAL FINANCIAL STRUCTURES.

3.And the QUALITY of these securization was HIGHER with delinquency rates lower than no securization assets Over-Indebtedness Unproductive develop model & housing bubble Structural comercial debt This sector is unproductive and where all the system's strength is in the labor force. The Future depends of ... 1- Of how the economic crisis and current financier resolves. - The exhibition to the sector of the real-estate promotion is a problem that will not be solved completely in the short term, though that the decrease of the prices

- The reduction of capacity of the sector in his set, simultaneously that increases the size of the entities increasing the efficiency.

- To increase his base of the capital and to adapt his ratios of leverage. II- Of the new rules of the game that finally are adopted national and internationally. And now... This model became investment market and the spiral became one of the largest housing bubbles in Europe.
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