Regional Spanish savings banks made nearly half of all domestic loans

Evidence

Where Ireland differs from Spain—apart from the magnitude of the bust—lies in the peculiar institutions of Spanish banking. As mentioned earlier, with their international portfolios the big three Spanish banks are reasonably well hedged against domestic exposures. Where, then, did this volume of credit come from? The answer was the cajas de ahorros, the regional savings banks (think US credit unions), especially the conglomerate version, Bankia, that went bust in 2012. These institutions together made nearly 50 percent of all domestic banking-sector loans. The cajas matter because their loan books are opaque (think subprime); they are undercapitalized; and most importantly, they are stuffed full of assets that are not coming back any time soon, particularly because the assets in question were so mispriced to begin with. — Mark Blyth, Austerity, 189

Categorization

• XREF: Connects to Mattei’s account of austerity’s technical roots and to the broader Eurozone public/private debt distinction literature. — connects to: Spain’s crisis emerged from regional savings banks, not its largest internationalized banks — Mark Blyth, Austerity: The History of a Dangerous…, 185
• DEFINE: Clarifies what the cajas de ahorros are and their structural role in Spanish credit.