Spanish banks face income hit, restructuring
link: http://ca.news.yahoo.com/s/reuters/081019/business/cbusiness_us_financial_spain_ordonez_1
Summary:
This article mainly about the income hit of the Spanish banks due to rising loan defaults, slowing business and higher financing costs. These important factors are likely to hurt Spanish bank income and lead to restructuring. In addition, with the global financial crisis, Spain’s banks face falling business and must accept credit growth will not return to past levels. Besides, smaller institutions and savings banks have higher real estate exposure and liquidity problems which have raised expectations of mergers. With prices growing up generally, the banks are not only facing problems of credit growth levels, but the challenge of higher financing costs.
Connection:
In the text book, we learned about business a transaction has inflow and outflow of money or goods. If the inflow or revenue is worth more than the outflow or expense in the exchange, the company has generated a profit or income from the transaction. On the other hand, if the inflow is less than the outflow, the company has experienced a loss. The major income for a bank is from credit growth. However, the finance problems from all over the world cause the decrease of people’s average income, and bands are also affected. For this reason, the inflow of a bank is decreasing. Moreover, as different financing costs are getting higher and higher, the expense of a bank increases, so the outflow of a bank is increasing. As a result, the difference between inflow and outflow is decreasing, so the profit is decreasing too.
Reflection:
After reading this article, I realize how global finance is connected. As the finance crisis occurs in the US, the whole world’s finance is affected negatively. Most companies are facing the problems that incomes decrease while expenses increase. Some companies even have to confront net loss. As a company, there should be preparation for different financial problems which may occur so that a company can overcome difficulties as quick as possible. Also, a company should be able to deal with different problems by well-organizing financial statements and preparing tactics for different situations.
