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27/10/2008 They are the really reliable Savings banks? An uncomfortable vision
The present article analyzes the savings banks particularly, but also he is applicable to Cooperative Banks and of Credit.
In accounting two great lines in the valuation of assets in spite of the attempt exist to unify with the NIIF (International Norms of financial Information):
- British. They value the assets on the basis of his value of market.
- Continental. They value the assets to price of acquisition. When assets are appraised (its value raises) does not enter this ascent, it is only entered when really it is sold then entering all the entrance. Nevertheless when the low value (prudence principle) must provisionar itself (to enter the potential cost/loss that could take place)
This last method is the used one by the Spanish companies. In addition in the case to Banks, boxes and cooperatives of credit, exist a specific norm of the Bank of Spain that it restricts to them tremendously. Thus according to the two fundamental games of the assets enterprise credits and participation it would be:
For the credits it has a calendar according to which they must be provisionando a percentage of the credit or loan based on the quotas pending payment by the holder.
For enterprise participation provisiona the difference between present value of the portfolio (quote if they are in stock market or Countable Theoretical Value but) and the value of acquisition if he were negative.
We are going to concentrate in first. According to they are increasing the non-payments, the organizations are increasing its dilatoriness, but they are provisionando the future potential dilatoriness, seems that no. Only is necessary to see the provisions equipped in the contests of Martinsa-Fadesa and Llanera or in refinancings in extremis with Real estate Colonial, Reyal Urbis or Metrovacesa (in these three last cases not to have to equip provision).
To equip the provision (to enter the potential loss) by the future dilatoriness is the base of the Anglo-Saxon countable system and is reason why the banks of both countries are suffering tremendously. These future losses are eating their Own Bottoms.
We have taken the balance from some savings banks published in www.cajasdeahorros.es and have made the following analysis.
Assuming that 25% of the credits of the savings banks are granted to promoters, we have done a table relating the Own percentage of provision in this type of credits and Bottoms. That percentage of Own Bottoms would be absorbed if the dilatoriness arrived at Xx% of the credits to promoters?
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Box 1 |
Box 2 |
Box 3 |
Box 4 |
| Dilatoriness of 5% |
23% |
30% |
34% |
18% |
| Dilatoriness of 10% |
45% |
61% |
68% |
36% |
| Dilatoriness of 15% |
68% |
91% |
102% |
54% |
| Dilatoriness of 20% |
91% |
121% |
136% |
71% |
| Dilatoriness of 25% |
114% |
152% |
170% |
89% |
As we can see, in some cases the 100% and without considering are surpassed that the rest of operations of credit is not free of risk (personal loans and to the consumption, discount, credit cards…).
According to these calculations, if the accounting system were the same in Spain that in those countries, it would have to quantify itself that amount of all the loans to promoters is not going to receive itself and to provisionar that amount (independent of the fact that they have begun not to pay or not). They did if it, the Own Bottoms are varied drastically reduced and would force to take part to the Bank of Spain to recapitalizar them.
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