Banks prepare 'Euribor Plus', the new reference rate for mortgages

• Estimated rates to be substituted by real ones
• Problems with setting rates into the future

EUROPE -- The scandals involving manipulation of several monetary rate indexes, in which some of the continent's largest banks were implicated, such as Société Générale, Deutsche Bank and RBS, who were fined some of the largest sums imposed by Brussels, have forced the European Commission to create a new standard rate for mortgages. Thus, the Euribor (Euro Interbank Offered Rate) will be substituted for what is for the time being is called Euribor Plus, which may well end up being the name used in future. Work continues on the new rating system, though it is still at an advanced planning stage. The four Spanish banks that are on the panel that contributes to set the Euribor interbank rate (BBVA, Santander, CaixaBank and CecaBank) have already been informed of how the new rate will be working, as have all the other banks making up the panel. The Euribor is the index that shows the interest rates at which banks lend to one another and is therefore used as the base for other loans, including mortgages.

In Spain, over 80% of the banks use the Euribor indicator, which is calculated at the estimated rates used daily among the 25 entities on the panel. In other words, the rate does not depend on the actual loans the bank makes, but rather on its estimates of what it will be charging that day, and is therefore subject to manipulation, as has been the case.

The Euribor Plus, however, will be based on the real lending rates used by the banks on the panel. It is supposed that this will make them less subject to manipulation. However, sources at financial entities say that one of the problems in calculating the new Euribor Plus is that operations are rarely set at any more than three months ahead, in the present inter-bank market, whereas mortgage rates are established for at least a year.

Who's who in the largest PP corruption cases

Latest PP corruption scandals in Madrid put the party way behind in voter intention polls

SPAIN -- "The voters are absolutely fed up with all the corruption coming out now," said a supporter of the new alternative party, Podemos, at a rally the other day. Her opinion reflects the result of the latest poll by El País, which has put the PP and also the PSOE into a panic. This is just the latest in a string of scandals that have flowered over the last years, though by no means are these limited to the governing party. However, the list is so long that we can only present the PP cases below. Other cases will come up here as we can write about them. For that purpose we've done a Who's Who of the bigger cases that have come to court, with the proceedings as they stand on Sunday, November 2. (Those politicians, business people and others, below, are not part of the latest upheavel that has resulted in 53 arrests on a huge number of charges, some of whom are in jail, though -- we will be doing their list later.) Enjoy:

Unicaja becomes a bank and will head a banking 'league'

MÁLAGA -- At an Extraordinary General Meeting, shareholders ratified the transformation: Unicaja became a Banking Foundation on October 30, with assets of €2,500 million, thus putting an end to 130 years of activity as a building society (USA: savings & loan). As soon as it is registered with the Stock Exchange authorities and the paperwork is completed, and the recent acquisition of Banco Ceiss is properly consolidated, it will be split in two and be offered on the Madrid Stock Exchange (La Bolsa): one part is the Fundación Bancaria, which in turn will own 90.8% of Unicaja Banco, which will control the daily banking business as well as its 'social' arm. When all this is done, the bank will become one of largest banks in Spain. The banking business in Spain will consist of two 'leagues',

All 15 Spanish banks pass ECB stress tests

MADRID -- With one minor exception, the Spanish banks passed the regular stress tests set by the European Central Bank, and they will not be needing an injection of capital. Good news for all, except for one of the smallest in the country, Liberbank, which came just below the mark with a deficit that has already been covered (See chart, click to enlarge). At the top of the list is another small entity, Kutxabank, followed by Bankinter and Bankia, the latter having received multi-millions in help not that long ago, and being in the midst of a row about directors' 'do-as-you-like' credit cards. Among other things resulting from the tests, the ECB has requested all of Spain's banks to get ready for a third recession -- just in case, of course. The Governor of the Bank of Spain, Luis María Linde said at the press conference preceding the presentation of the tests results, "The results allow us to think that, even though the Spanish banking sector is facing many challenges in the short and medium term [including convergence towards a new regulatory and supervisory framework, and complex economic environment that could affect their profitability], our country's financial entities face a future in good condition."  (See chart below)

Some bank customers pay over €270 a year in commissions

MADRID -- A recent study by the consumer group Facua reveals that clients of Barclays, Santander, Unicaja and La Caixa are the ones who pay highest commissions, which can reach a hefty €270 per year or more. According to the survey, the median amount paid is €168.73 if your paycheck, benefits or pension are not automatically credited (domiciliado; here we use 'domiciled' for no reason except convenience). Below is a sample listing of the costs:

If you’re being charged for using a credit card, you’re being robbed

CLICK TO ENLARGE

MADRID – Royal Decree 8/2014 became law on September 1: it expressly banns being charged for using a credit card. However, several consumer organizations have discovered that many companies, including some airlines, are still doing so. Indeed, it’s the airlines who are mainly defying the law. According to OCU (Organización de Consumidores y Usuarios), "this is a completely illegal charge that has nothing to do with management expenses.” From its Twitter account (#NoConMiTarjeta – NotWithMyCard), the organization asks consumers to take a screen shot or a photo showing a bill that includes the charge. They are inviting anyone who have been charged to join others in a class action suit they are preparing right now, the idea being to stop the practice, punish the perpetrators and recover the customers’ money. (Enlarge the image and check right at the bottom ...)

Citibank also leaves Spain

MADRID – In a similar move to that of Barclays, Citibank has also decided to sell off its retail business by selling it to Banco Popular, who will be integrating it into its online division, citibank.es  In Spain the US bank, once one of the largest in the world, operated mainly in the credit card business, Citi Oro and Visa Cepsa (both free even without an account at the bank), of which they emitted over a million.//Banco Popular has stated that it will maintain the same conditions for the cards and customers will not notice any difference, as they will continue to operate in the same way as Citibank. However, it remains to be seen whether this will continue into the future, given that the contracts for the cards are of indefinite duration (See our article on Barclays. Also, the Cepsa Visa, obtainable at Cepsa petrol stations and being a shared brand, we shall see if the agreements with the oil company remain the same -- watch this space (and please tell us if you have any news on the subject!)

Barclays customers move to Caixabank

MADRID – With Barclays having sold off their Spanish retail business (270 branches) to one of Europe’s largest banks, its customers’ accounts will automatically be transferred to Caixabank, unless they have decided to move their custom elsewhere. By this time, Barclays clientele will probably have received notification of much of the following. However, we have often been asked to translate this kind of thing because the entity has neglected to put it into English or another European language. So, how will this affect you?