Bloomberg News

Bank of Spain Revamp Will Proceed Even If Ordonez Quits, PP Says

October 25, 2011

Oct. 25 (Bloomberg) -- A People’s Party government will overhaul the Bank of Spain to give technical staff greater clout and will press ahead even if Governor Miguel Angel Fernandez Ordonez opposes the measure, the party’s economy secretary said.

The PP, which is the favorite to win a general election on Nov. 20, would give technical officials in the bank greater power to resist influence from management, Alvaro Nadal said in an interview at the opposition party’s headquarters in Madrid today. Ordonez, appointed by the Socialist Party government, is due to remain in office until July 2012.

“If he’s going to resign or not when we put the reform on the table, it’s up to him, but we will do the reform for sure,” Nadal said. A PP government would “probably” start the overhaul before July, he said.

Spain’s bank-bailout fund took over three lenders on Sept. 30 at a cost of $10 billion, and the Bank of Spain said the restructuring of the financial industry was complete. Lenders are suffering from a surge in bad loans and funding costs more than three years after the debt-fueled property boom collapsed.

“The Bank of Spain didn’t analyze correctly the situation in the Spanish banking sector,” said Nadal. “It reacted very late and we are paying the consequences right now.”

A Bank of Spain spokesman declined to comment. The central bank defended its approach on Sept. 30, saying its strategy was “adapted to the Spanish circumstances and has been strengthened in the light of the gradual deterioration on financial markets.” Lenders have made provisions of 105 billion euros ($146 billion) since 2008, the bank said.

--Editors: Craig Stirling, Eddie Buckle

To contact the reporters on this story: Emma Ross-Thomas in Madrid at; Angeline Benoit in Madrid at

To contact the editor responsible for this story: Craig Stirling at

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