Spanish bank hits back at Germany

Germany must accept its fate as the euro’s financial backstop or quit meddling in how indebted members revive their economies, one of Spain’s leading fund firms has said, in remarks likely to stoke fears of a Mediterranean backlash against austerity.

The chief executive of March Gestion de Fondos, José Luis Jiménez Guajardo- Fajardo, the asset management arm of Banca March, said that he sometimes felt Germany had a vested interest in an unsettled Europe and was cashing in on bailout nerves.

“Of course Germany is taking profit from this. They are paying less for their debt than ever. Because the euro is once again weak, this is very helpful for German exports abroad,” Jiménez said, calling on the country to take a back seat role in formulating the economic policy of peripheral strugglers.

“I do not want to believe the Germans are playing this in a way just so they can take profit, but it seems like we have a lack of political decisionmaking [to offset this impact].”

Banca March can lay claim to the title of Europe’s strongest lender after topping the list of 91 banks stress-tested by the European Banking Authority last summer for their capacity to withstand another credit crunch.

The fund manages the collective investments of Spain’s March dynasty, alongside the assets of Banca March customers in an investment style Jiménez describes as “conservative” relative to most competitors.

But while a selloff in Spanish bank stocks and sovereign debt gathers pace, Jiménez is betting big on his country’s ability to trim its budgets and maintain its modest debt-to-GDP ratio relative to France, Britain, and even Germany.

“If you’re a smart investor, when you see a bad situation, you buy because you have to buy cheap. For me, right now is the time to buy Spanish debt and sell German debt. I’ll never buy 10-year bunds for 1.7%. You can lose a lot of money,” he said. The fund bought one-year Spanish debt offering a 5% return in December, before selling it on again in February to buy Italian bonds.

After a period of relative calm brought about by the European Central Bank’s €1 trillion cash injection into the region’s banks, Spain’s parlous economy has revived the debate about the viability of the eurozone.

— Reuters

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