Spain's PM meets with business leaders

By Harold Heckle

Associated Press

Published: Saturday, Nov. 27 2010 6:40 a.m. MST

MADRID — The Spanish prime minister met with the country's top business leaders on Saturday in a bid to stimulate a faltering economy and ease fears generated by the eurozone debt crisis.

Jose Luis Rodriguez Zapatero chaired the gathering with the heads of 37 of the country's largest businesses, including Emilio Botin of Santander bank, Cesar Alierta of telecommunications giant Telefonica S.A. and Antonio Brufau of energy company Repsol YPF.

The meeting occurred one day after Zapatero ruled out any possibility that Spain might require a bail out like Ireland or Greece.

He said Spain's plans to reduce its deficit were "being fulfilled scrupulously" and added that the country's total debt was 20 percentage points below the European average. Spain's debt at the end of 2009 was €560 billion ($740 billion), roughly 60 percent of its GDP.

Finance Minister Elena Salgado said the entities were "the tractors of our economy" and the meeting was "to discuss growth perspectives and the possibilities of stimulating that growth."

Spain is struggling to recover from nearly two years of recession with unemployment at a euro-zone high of almost 20 percent.

Third-quarter GDP growth was flat after two quarters of weak growth, although it was up 0.2 percent year-on-year — the first such rise in seven quarters.

The Spanish real estate sector, for over a decade a driving force in the economy, tanked two years ago and many savings banks — or "cajas" — which were exposed are now saddled with billions of euros in foreclosed property.

These entities are currently under a consolidation process scheduled to finish next month.

Javier Ariztegui, deputy governor of Spain's central bank said Friday that the Bank of Spain now required quarterly and annual account reports relating to capital exposed to real estate debt.

Ariztegui said cajas must now provide detailed information about construction and residential mortgage portfolios and they must explain clearly how "assets that could have been damaged" have been dealt with during fusion processes.

Zapatero was due to explain his government's plans to bolster the economy and also to ask firms to increase their exports and investment, in a bid to create employment.

According to documents filed Friday with Spain's stock market regulator, Botin has taken advantage of low market prices to buy 1.9 million shares in Banco Santander, S.A. at a value of €14.9 million ($19.7 million).

Santander is Spain's largest bank and its capital is currently set at 8.3 billion shares of which president Botin now owns 0.94 percent.

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