Credit: Reuters/Francois Lenoir LUXEMBOURG | Tue Oct 15, 2013 9:46am EDT LUXEMBOURG (Reuters) – Spain will probably bring an end to the programme of international aid for its banks on schedule this year, Economy Minister Luis de Guindos told a news conference in Luxembourg on Tuesday. Madrid turned to Europe last year for 41 billion euros ($56 billion) to help the weakest of its banks, which have been crippled by the collapse of its real estate market and resulting mass of failed loans to developers and houseowners. With the economic fortunes of Europe’s debt-ridden southern half showing signs of improving, a senior official in Brussels told Reuters last week that Spain was unlikely to seek more financial aid for the banks when the current programme runs out. “The central scenario, and the most probable one, is that on November 15 (it will be decided that) Spain’s banking programme will come to a close,” de Guindos told reporters at a meeting of European Union finance ministers. The European Central Bank and the European Commission, which backed the rescue, last month said in a review of Spanish banking reforms that the sector remained comfortably solvent, and praised its turnaround. They stressed, however, that Spain’s weak economy – set to emerge from a two-year recession by the end of the year – and a fall-off in lending still posed a risk. Like their European peers, Spanish banks also face a European review of their balance sheets early next year before the ECB takes over as supervisor. Some believe their restructured or refinanced loans could come under particular scrutiny, and that they could be told to put more cash aside to counter potential losses on these, banking sources in Madrid have said. Any capital gap that that process leaves is likely to be manageable, though smaller banks that are owned by the state are unlikely to be able to turn to the market like some of their peers. The Spanish government currently estimates that lenders will have to put aside an extra 5 billion euros in provisions to counter such losses, a source at the Economy Ministry said. “The general perception is that in Europe the banking system has not been as thoroughly cleaned up as in the United States … which is among the elements holding back economic growth in Europe,” de Guindos told the news conference, in reference to the European review of banks’ books. (Reporting by Robin Emmott and Martin Santa in Luxembourg, Sonya Dowsett, Jose Elias Rodriguez and Jesus Aguado in Madrid; Writing by Sarah White; editing by Patrick Graham) Tweet this
Bank on Europe Bank Dividends With These ETFs
banks became dividend offenders, cutting or suspending payouts, during the global financial crisis. The European sovereign debt crisis prompted similar behavior from some banks across the Atlantic, but with European equities resurgent and the overall dividend outlook for the region improving, investors could be treated to higher payouts from some of the continents financial services firms. Excluding special dividends, payouts from companies in the MSCI Europe ex-U.K. Index will rise 6.8% to $251.2 billion this fiscal year, reports Peter Nurse for the Wall Street Journal . Banks will pay the most, in absolute terms, the Journal reported, citing research firm Markit. While the U.K. and Switzerland combine for almost 45% of EUFNs weight, the ETF is not light on previously controversial Eurozone banks. For example, Spanish banking giant Banco Santander ( SAN ) is EUFNs second-largest holding. [ ETFs for an Improving Europe ] Santander will be the largest dividend contributor in absolute terms (in the MSCI Europe ex-UK Index), the Journal reported, citing Markit. The research firm also sees substantial increases in dividends from French and Swiss banks. France, Switzerland and Spain and EUFNs second- through fourth-largest country weights, combining for about 35% of the ETFs weight. [ Europe Bank ETFs: Contrarian Investments ] Markit sees big dividend hikes coming from UBS ( UBS ) and Credit Suisse ( CS ), which combine for 6% of EUFNs weight. Another ETF to consider for the European bank dividend growth theme is the unheralded SPDR S&P International Financial Sector ETF ( IPF ) . IPF is not a pure Europe play as the fund offers significant exposure to Japan, Australia and Canada, among others. However, Switzerland, France, Germany and Spain combine for 22% of the ETFs weight and IPF offers exposure to five other Eurozone nations.