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Spain shows the cost of postponing pain

Allowing crippled banks to fudge their loan losses is not the way to deliver a healthy banking market.
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About two years ago, an investment banker told this magazine that the €30bn loan losses then being disclosed for Spain’s cajas (savings banks) were a gross underestimate. He estimated the actual losses at €150bn to €200bn.

An understandably nervous press officer asked us to take the comment on background. But today, the official figure acknowledged by Spanish regulators has vindicated our nameless banker, reaching €180bn.

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