By Don Quijones: “Spain’s banks are back on track.” That was the upbeat
message announced to great fanfare at the last meeting of the Spanish
Banking Association (AEB for its Spanish acronym), Spain’s biggest
financial sector lobbying group, held in Madrid earlier this week.
The most visible sign of improved health was in the sector’s profits. In 2013 the AEB’s member banks notched up 7.2 billion euros in profits between them — a significant step up from the previous year’s delusory 2.8 billion-euro loss. During a presentation titled “End of an Era: A New Chapter,” Miguel Martín, the AEB’s outgoing president, attributed the dramatic turnaround to the sector’s “reduced need for allowances and provisions” following its “exceptional restructuring” in 2012.
According to Martín, Spain’s banking reform has led to a “stronger, more viable, more efficient and more competitive” financial sector – good news not just for the banks, but for everyone. As Spain takes yet another giant step towards full recovery, its creditors and investors can rest assured that they’re backing the right horse, and Spanish businesses and families might finally begin getting the credit they need to get back on their feet.
Well, at least that’s the official story. On the QT and off the record, it’s a bare-faced lie, a cynical deception masking a much bleaker reality — one consisting of the following four features:


