By Manel García Biel
By now we can clearly define Mariano Rajoy as a politician who has based his policies on lies. The clearest example is the bank bailout. Right from the outset. Spain’s PM and his ministers ruled out the word rescue. For them it was a loan, “under very good terms.” Rajoy said that it was he who had laid down the conditions, and that in no way was this a bailout by the country. In any case, he said, it would be the financial sector itself and not the state that would return the supposed “credit”, that is, the rescue, for most of public opinion. Today there is no doubt that Rajoy’s lied, the figures from the Bank of Spain make it quite clear.
So far the amount of public money invested in the rescued financial institutions, in the form of capital alone is 61.5 billion euros. Following the sale of Catalunya Banc, the sum recovered is around 2.5 billion euros, ie 4% of the amount invested in the rescue. As of today, it can now be considered lost, ie irrecoverable and the state must return to Brussels, some 26 billion euros (12 billion for Catalunya Banc, 5.5 billion euros for Banco de Valencia, 245 million euros for Banco Gallego, and 8.3 billion euros for NCG).
To this amount we need also to add 13 billion euros for Bankia (the difference between 22.4 billion invested by the state run Fund for Orderly Bank Restructuring (FROB) and the current value of 9.5 billion euros. That is to say, as of today, the citizenship must pay losses through our taxes and/or public spending and welfare cuts of nearly 39 billion euros.
And that’s not all, there is the aid to be given to the buyers, the Asset Protection Scheme (APS), to compensate for possible losses, some 28 billion euros, plus what possible losses from any negative results of Spain’s “bank bad “(SAREB), where 48 billion euros has been deposited.
Big banks get bigger
Rajoy consciously lied. He never thought that financial institutions return the funds but rather that Spaniards would pay for the losses. The big winners have been the big banks that have consolidated their oligopoly with public funding. The BBVA, CaixaBank and to a lesser extent Banco Sabadell have gained market share at bargain prices. All this ignoring the public hand-outs of nearly 68 billion euros to private banks through guarantees like tax credits.
You only have to look at the most recent case of the sale of Catalunya Banc to BBVA. The price paid by BBVA will be 1.2 billion euros for an entity in which public funds amounting to 13.6 billion euros were invested to clean it up.
With the purchase, BBVA has increased its market share in Spain from 11.9 to 14.2%, while for Catalonia alone its slice of the market increases from 12.8 to 24.9%. This makes it the largest bank in Spain and the second in Catalonia where CaixaBank maintains control of the market.
Now BBVA wants to reduce the costs of Catalunya Banc by 40%, reducing branches and especially staff, at a cost of 450 million euros. Together with just over a billion euros for the purchase, this seems very little given the benefits of increasing its market share to 3.6 million customers and the 3.5 billion euros in tax credits enjoyed by Catalunya Banc.
One can’t help noting the remarkable stinginess of private banks. BBVA has paid, as noted, just over 1,000 million for Catalunya Banc, but its competitors Santander and CaixaBank offered 300 million and 80 million euros respectively. They are so greedy, they wanted it for free!
Once again, with this restructuring process, and as much as the PP wants to deceive us, we can see the oligopolistic banks gaining and society losing.
And all this without anyone asking who is responsible for the crisis of Spain’s savings banks. Or bothering to put on trial the few that in the meanwhile enriched themselves. How can it be that no one asks people like deputy PMs Narcis Serra (socialist party, PSOE) and Rodrigo Rato (Popular Party), to be accountable for their performance as chairmen of Catalunya Banc and Bankia, respectively, and who are allowed to continue as if nothing happened?
Must we be forced once again to ask why both the PP and the PSOE ignored an alternative way of restructuring the banks? If society assumes the costs, should it not also benefit from it?
Why instead of giving nationalized banks to the private banks for nothing, did they has not create strong and powerful public banks to compete with the private sector? A public bank that would prevent the financial exclusion of large parts of Spanish society, filling the void left by the savings banks, the cajas. A public bank that would stimulate investment in the productive sectors and in small businesses. A public bank that would make the bad bank a public housing stock for sale at affordable prices or for social rent in a country ravaged by foreclosures.
Clearly, the political will of the current PP government but also by action or omission PSOE, is not there. They are taking advantage of the economic crisis caused by the financial crisis to enhance and strengthen the oligopolistic power of the speculative and financial sector. And to offset the cost of enriching a few, they make unprecedented cut to basic social rights for the majority with the complicity of the mainstream media in the country.
It is imperative that all those who want to be an alternative to the current state of affairs incessantly challenge this big lie that the two main parties, and especially the PP, have told, following the political crisis and the false policies of austericide presented to us as the only remedy – when the real goal is to benefit the 1%, against the rest of the 99% of the citizens who pay their costs.
Manel García Biel is an economist, trade unionist and member of ICV (Catalan Greens)
Translated by Revolting Europe