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The Spanish stock market suffered this year's third major downfall on Tuesday
(-5.45 percent) as a result of the banking sector's liquidity problems. Fears of
a double dip world recession grew sharply ahead of U.S. jobs report to be
released on Friday.
Once again, banks caused the Ibex-35 to sink under 9,200 points. Santander
and BBVA shares fell by 6.8 and 7.2 percent respectively, whilst Bankinter saw
the value of its shares reduced by 8 percent.
The Spanish financial sector was once more under close scrutiny by the
international press on Tuesday when its liquidity problems were highlighted.
According to the Financial Times, Spanish banks have been exerting pressure on
the European Central Bank (ECB) ahead of Thursday's redemption of 442 billion
euro (539.7 billion U.S. dollars) granted to European banks at an interest rate
of 1 percent one year ago.
The London-based journal reported that Spanish banks accuse the ECB of
"absurd" behavior if the European monetary authorities finally decide to
terminate their emergency-cash policies. The one- year credits were a novel
policy introduced by the ECB as an extraordinary support measure during the
financial crisis.
Given the time-length of these loans, the Financial Times reports, the ECB
will not renew them since they may distort markets and condition the ECB's
monetary policies. The ECB is even more reluctant to renew the loan scheme in
the current climate, with the ongoing sovereign debt crisis still
unresolved. |
