Op-ed: Quarterly earnings down for Spanish banks

Today the Spanish banking sector will begin to report earnings for Q1 2011. The analyst consensus predicts that although banks will continue to show profits, this will drop 20% compared to the same period last year.

The drop in profits is explained by fewer deals across the sector, which forces lenders to thin their yield margins and reduce commissions.

In order to deal with falling profits, the banks are taking refuge in selling stock shares in order to buy Spanish treasuries as they try to come up with the 50 billion euros in provisions demanded by De Guindos and the Ministry of the Economy.

There are no alternatives for recuperating their business and the stream of credit that will dry up during financial reforms.