Spain Business Brief - Tuesday November 11 2008

Spain Business Brief - Tuesday November 11 2008
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By h.b. - Nov 11, 2008 - 1:25 PM

Minister for the Economy, Pedro Solbes - Photo EFE

Anticipation ahead of the Washington economic summit next weekend.

Pedro Solbes, Spanish Minister for the Economy, has been lowering expectation about next weekend’s economic summit being held in Washington.
‘You can’t arrive for breakfast of coffee and churros, and have redefined capitalism by the afternoon’. Solbes said he considered that the summit would mark the start of a reform plan for the financial system, but that its consequences would not be immediate.
Solbes also praised the rights issued announced by Banco Santander this Monday. He said that the 25% amplification of capital to increase solvency levels in the bank was a ‘brave’ move. It has been confirmed that Barack Obama will not be attending the summit, but he will be present at the dinner the night before.

There has been more praise for the Bank of Spain, this time in the latest edition of The Wall Street Journal. The paper says that the Bank of England has proposed copying the Spanish methods, previously considered too conservative by many, and to transfer them to the international scenario. Coming in for particular praise is a dynamic system introduced by the Spanish Central Bank in the year 2000, under which reserves are accumulated against any future mortgage losses. It means that Spanish banks will start next year with a cushion of 40 billion €.

The Spanish Government has given details of changes to its VIVE plan which intends to try and revive dramatically falling car sales. They now want cars that are ten years old or worth more than 20,000 € to be eligible for the VIVE grants. Meanwhile the talks continue with the car industry to try and reach agreement on a future plan, given the failure of the current model.

Staying with transport, the financial crisis and the effect on many routes of new AVE high speed train lines, has led to a 16% fall in the passenger numbers on domestic airline routes last September, the industry’s worst month for 12 years. AVE occupation numbers were up 28% for the month year on year.

Vodafone has announced a 17% increase in profits, but at the same time has reduced expectations for profits for the rest of the year. The company says that it has already put a cost-saving plan into action. For the first half year from April the company made a net profit of 3.985 billion pounds, 4.87 billion €.
Meanwhile Telefónica has taken over from Vodafone as the largest telecom company as far as market worth is concerned, now at more than 71 billion. It’s the very first time that Telefónica has come out on top.

The Sol Melía hotel change has announced a 42% fall in profits for the year to September at 80 million € net. It comes as cashflow over the period was down 3% on the same period last year.

And finally
Several female Spanish directors have said in a debate on company management in the 21st century, that if there had been more women in power in the financial companies, the crisis would have been far less serious. María Helene Antolín from the board of Iberdrola Renovables, said that women are far more prudent in managing a company.

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