Spanish banks come up smelling of roses

According to a recent report by Fitch ratings, the banking system in Spain seems optimistically robust given the global financial crisis, but this sweet smell of success comes with thorns attached.

The report describes how well the bigger banks have done in their operating profitability given prudent regulation and limited exposure to risk, and how they should be able to continually report sound profitability.

This is all excellent news, providing you don’t live in the real world, where your pensions and savings represent a fraction of their original value and you’re selling a property in Spain because of the market crash.

Property prices in Spain have fallen steeply, and further slides look likely. The Spanish property market is bloated with surplus, with values artificially held up by banks not prepared to make reduced profit on repossessed assets.

The patient cash ready investor may prove to be a market saviour here in reducing bank lending dependency and giving current market values the coffee it needs.