The financial sector's underlying problems have not been fixed after restructurings across the industry in 2012. But there are still some loose ends to tie up, and more public bailout money will be needed. Credit cooperatives have been neglected in the bank bailout, but now they will be included in efforts to clean up the sector because their business has dropped and loan defaults have risen.
Struggling credit cooperatives are not a major issue since their market share is small and, except for Cajamar, they operate in small, set geographic zones. Increasing uncertainty in the sector suggests that some of the banks that already received bailout funds will neet even more to clean up their balance sheets -- particularly the banks that were nationalized.
Some banks made forecasts that were too optimistic, abused refinancing options (with which they are going to have to raise capital levels) and have to take on unexpected costs of dealing with preferential shareholder arbitration cases. The issue is that the government, healthy banks, taxpayers, and institutions who lent a helping hand for the last bailout want to pay any more to help Spanish banks.
Independent of the costs involved, which are expected to be high, the first symptom that the new round of aid is necessary is that there were some serious miscalculations of how to use public bailout money to restructure the banks the first time around.
It seems obvious that the 40 billion euros that went to clean up the old savings banks were not enough. More capital will definitely solve the problem, and finding it would eliminate one more roadbloack to recovery.
