Should a country embrace buyout groups with a growing appetite for its assets or repel them as rapacious capitalism on fears of job cuts and short financial gains? That’s the question facing Spain — which for the greater part of the past decade has suffered a steep economic crisis — as it finds itself luring a growing number of buyout funds looking to snap up assets, according to DD’s Javier Espinoza, the Financial Times reported.
Spain
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Banco Santander said it will no longer hire Andrea Orcel, the outgoing boss of UBS’s investment bank, as its chief executive in a big U-turn just four months after Spain’s largest lender announced his appointment. Santander said the reversal was triggered by the amount that the bank would have had to pay Mr Orcel to compensate him for deferred stock awards that he earned during his seven-year career at UBS, the Financial Times reported.
The chairwoman and chief executive have resigned, the head of finance has been fired, while the company’s dividend has been slashed and its debt downgraded to junk, the Financial Times reported. It has been a grim few months for Dia Group, the Spanish supermarket chain. The bad news has crushed the group’s shares, which have this year plummeted more than 80 per cent to under €0.70, and pushed down the company’s long-term debt to around half its face value.
Aryzta, the troubled Irish-Swiss baked goods group, has been urged to halve the scale of a planned €800 million rights issue designed to pay down debt and fund the group through a major restructuring of its operations, The Irish Times reported. Cobas Asset Management, the Spanish group that is Aryzta’s largest single shareholder, said on Monday that it is requesting an extraordinary general meeting of shareholders to reduce the money being raised to €400 million. Cobas owns almost 15 per cent of Aryzta’s voting stock.
The spread between the cost of Italian and Spanish debt is at its highest level for more than 20 years, in a sign that investors remain unconcerned about the future of the eurozone despite Italy’s spiralling bond yields, the Financial Times reported. Italy’s 10-year yield hit 3.71 per cent on Tuesday, its highest level since February 2014, after the country’s finance minister Giovanni Tria failed to alleviate growing investor jitters over its fiscal position. Short-dated bond yields also rose, although they remain below the highs they hit earlier this year.
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Optimism in Spain’s services sector fell to a five-year low in August, amid rising input costs and a slowdown in new business growth, according to data released on Wednesday by IHS Markit, the Financial Times reported. Spain’s purchasing managers’ index fell to 52.1, below an analyst forecast of 52.7 according to a Reuters poll, as new orders rose at their slower pace since 2016. Although executives felt that the sector had continued to grow overall — a reading over 50 denotes growth — this was at a “much weaker” rate than earlier in the year, said economists at IHS Markit.
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Spanish industrial production increased slower than expected in June, fuelling concerns that the rebound in one of the eurozone’s major economies is losing momentum, the Financial Times reported. Year-on-year the rate of industrial production in Spain rose 0.5 per cent, significantly slower than the 1.9 per cent rise forecast by analysts in a Reuters poll and below the 1.6 per cent rise recorded in May, according to data from the Instituto Nacional de Estadistica. The fall was driven by a 8.3 per cent fall in energy production, and continued the downward trajectory seen since March.
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The story of Banco Popular, the Spanish bank which failed in June last year and was subsequently bought by Santander for just €1, is still unfolding, the Financial Times reported. The Single Resolution Board (SRB), a Brussels body set up in 2015 to deal with bank failure, on Monday released its third valuation report for the bank. It is not good news for the investors who saw their holdings wiped out last year. Around €2bn in the bank's junior liabilities (which included additional tier 1 and tier 2 debt) were written down by the SRB ahead of Santander's purchase.
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Spain’s services industry faced a “marked slowdown” in activity growth last month, bringing a key gauge to its lowest level in almost five years, according to a survey of executives released on Friday, the Financial Times reported. IHS Markit’s Spain services PMI dropped to 52.6 in July from 55.4 in June. It was substantially worse than the fall to 54.4 that economists polled by Reuters had forecast. Output in the services industry expanded at the slowest rate since 2013, IHS Markit said, while growth in new orders eased.
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Banco Santander reported a 3 per cent fall in second-quarter net earnings, hit by €300m in integration costs from the takeover of troubled lender Banco Popular and a strong euro, the Financial Times reported. The eurozone’s largest bank by market capitalisation said total net profits, including the Popular charge, slipped to €1.698bn for the three months to June, down from €1.75bn in 2017. Analysts polled by Bloomberg had expected net earnings of €1.67bn for the quarter.
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