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Unhealthy Spanish banking practices

Ben Chu

spanishbanks 150x150 Unhealthy Spanish banking practicesInteresting piece of research reported in the Financial Times by Jose Marin and Benjamin Golez suggesting that fund managers owned by financial conglomerates in Spain rush in to buy the shares of the parent company when it gets into trouble.

In other words, the fund managers put the interests of their shareholders above those of their investors.

And the authors argue that the tendency cannot be ascribed to a clever contrarian investment strategy because there is no parallel pattern of these funds buying up the shares of other pressurised financial companies.

Moreover, it’s not a practice that has paid off, since pummelled banking conglomerate shares have not recovered sufficiently.

It would be interesting to see if these Spanish practices are to be found among US and European fund managers who are employed by large banks. If they are, that would be more powerful evidence to support the case for breaking up the financial supermarkets.

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