A new run on the banks? Spaniards pulling cash out at record rates

Spanish consumers are pulling their cash out of banks at record levels, according to figures released on Tuesday.

Private sector deposits fell by nearly 5 percent in July to ā‚¬1.509, the Telegraph reported, citingĀ European Central BankĀ data, as public confidence in the banking system reached all-time lows amid a worsening economic situation.

The news comes after bond markets continued to hammer the debt-ridden euro zone nations Spain and Italy last week.

On Friday, the interest rate on a 10-year loan to the Spanish government briefly topped 6 percent — a level that forced Greece into a default earlier this year, despite massive financial support from international sources — before settling back to 5.96 percent.

“The pick-up in yields is a clear negative headline for Spain,” Jo Tomkins, an analyst at 4Cast, a consulting firm, told theĀ New YorkĀ Times. “The country is facing a double-whammy of low growth and tough austerity, and [there are] doubts that it will be able to hit already optimistic deficit targets.”

The surge in bond yields was followed by a two-notch credit downgrade by Standard & Poor’s, which slashed the country’s rating to BBB + on worries about the government’s exposure to the nation’s ailing banks. The current reduced rating is still considered to be investment grade.

The yield on Spain’s two-year notes surged to the highest level in 18 years, Bloomberg News said.

Meanwhile, Spanish unemployment climbed to 24.4 percent of the workforce, the government said.

Italy’s cost of borrowing was close behind its western neighbor: The yield on a 10-year note rose Friday to 5.84 percent from 5.24 percent.

“These … results certainly came at a price which, in turn, leaves a question mark over how long Italy will be able to finance itself at levels that can be deemed sustainable,” Richard McGuire, senior fixed income strategist at Rabobank, told the Wall Street Journal.

bull bank run spain

Source:Ā http://www.ibtimes.com/articles/378106/20120828/spain-debt-bonds-bank-deposits.htm

2 comments

  1. What is funny with all the imbeciles in the financial press is they dont know that even Switzerland and USA are bankrupt. And Germany, France and UK, Austria, Netherlands and Belgium ! I cant include all of them by the way. Most of the spanish imbeciles in question are putting their money in these countries not even knowing that the same thing is about to arrive to them too ! It s so funny in a certain way.

  2. Broke they’re all broke, finance what? Debt with more debt, its such a joke.

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