BBVA Chief Says Threat of Defaults in Spain, Italy Will Spur EU
Banco Bilbao Vizcaya Argentaria SA Chairman Francisco Gonzalez said the threat of debt defaults sweeping through Spain and Italy and wrecking global growth will force European officials to act to stop the debt crisis.
“There has to be movement, otherwise we’ll start to head toward the scenario -- which I don’t believe in -- which is defaults for Spain and Italy,” Gonzalez said during a discussion in Santiago de Compostela yesterday broadcast on radio station Cadena Ser’s website. “The economic impact of that would be so far-reaching for Spain, Europe and the world, that I just can’t see it. This is going to get fixed.”
German Chancellor Angela Merkel yesterday rejected “seemingly easy” solutions to the financial turmoil, resisting calls by France, Spain and Italy for the European Central Bank to fund southern European nations that are being squeezed out of debt markets. The yield on Spain’s 10-year debt touched a euro- era record of 6.998 yesterday after Moody’s Investors Service cut the sovereign’s rating to one step from junk.
Bankers and politicians across southern Europe are lobbying Germany and the ECB to buy their debt and stimulate economic growth after bond-market contagion accelerated following a 100 billion-euro ($126 billion) bank-rescue package for Spain approved on June 9.
Shares of BBVA, Spain’s second-biggest bank, have tumbled 28 percent over the past year as the country’s second recession in three years pushed up unemployment and raised concerns about undisclosed real-estate losses that lenders may be carrying on their balance sheets.
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