Will be Spain after Northern Rock?

Spanish officials have denied reports that the country's property market is heading of a crash and that its financial institutions had required emergency liquidity along the lines of Northern Rock.

The Bank of Spain Governor Miguel Angel Ordonez said that the current market turbulence has increased uncertainty in Spain, as everywhere else. He asked for more transparency in the market, " The biggest favour banks can do is to come clean on losses" http://www.forbes.com/feeds/ap/2007/09/18/ap4129672.html. However, it is known that this is difficult to achieve.

On the other hand, Spanish banks' shares have fallen almost 40 pc since April, as the credit crunch is changing the picture for Spanish lenders. It is expected the turmoil to affect big Spanish companies which want to borrow money to finance their expansion. Furthermore, an economist at the Instituto the Empresas business school in Madrid estimates haf a million families will have trouble paying their mortgages if euro interest rates, which have double in two years, rich much further.

To sum up, banks will all be affected by a drop in confidence, which is really damaging for the market.