On Banco Santander giving me the creeps with its persistent ‘all is fine’ attitude

Hobbes, I told you last week, good old Spanish manners, tricks, or just “lie until you cannot lie anymore, do the unexpected, and then keep on lying some more” business style is again making headlines.

FT.com and many others report that Banco Santander has launched a €7.2bn rights issue (1% of its capital) at a 46% discount on Friday’s closing price “to bolster its capital ratios”. Thanks god that we are already used to bankers lying to all of us.

A few weeks ago, Mr Emilio Botín’s executives (he is the bank’s chairman and patriarch of the banking family) were daring to boast about the bank’s financial health.

So far this year, they have increased its core capital ratio by 5%, 2% to fund the Alliance & Leicester purchase, this 1% to increase the capital ratio to 7% and an extra 2% promised to fund the purchase the 75,65% share of Sovereign Bancorp it didn’t own yet.

Are we seeing here a stronger than thou bank taking advantage of ailing competitors? I sure hope so, but being Spanish myself, I feel some parallelisms with growth strategies by other Spanish captains of business “fleeing forward” (huyendo hacia adelante) without thinking much about the long term consequences of their actions.

Among Spanish businesspeople, and I include bankers, there seems to be a lack of long term thinking, but I guess that that is just inherited from a society who is inward looking, unaware of what is happening out there, were it be higher food and fuel prices, financial firms collapsing, or the raise of highly competitive and low-cost Asian countries.

The fact that Western countries are in dire straits due to, amongst others, a combination of greed, soft money, an obsession with growth, and excessive deregulation is not used to look seriously at Spanish competitiveness and plan ahead, but a moment to boast how good they are. Oh dear! Latin people!



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