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Cablegate: Madrid Economic Weekly, Nov. 17-21

VZCZCXRO7676
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #1226/01 3290817
ZNR UUUUU ZZH
P 240817Z NOV 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 5610
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAS/AMEMBASSY ALGIERS 4026
RUEHBO/AMEMBASSY BOGOTA 5380
RUEHBU/AMEMBASSY BUENOS AIRES 0394
RUEHCV/AMEMBASSY CARACAS 1322
RUEHLP/AMEMBASSY LA PAZ 1324
RUEHMO/AMEMBASSY MOSCOW 0921
RUEHQT/AMEMBASSY QUITO 1429
RUEHRB/AMEMBASSY RABAT 6124
RUEHLA/AMCONSUL BARCELONA 3667
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 001226

SIPDIS

STATE FOR EUR/WE:SAMSON,ZERDECKI AND EEB/IFD/OMA
TREASURY FOR OIA/OEE/W.LINDQUIST
COMMERCE FOR 4212/DON CALVERT

E.O. 12958: N/A
TAGS: ECON EFIN EINV ENRG EPET SP SCUL
SUBJECT: MADRID ECONOMIC WEEKLY, NOV. 17-21

MADRID 00001226 001.2 OF 002


Contents

EFIN: Banks Take Advantage of Less than Half of GOS
5-Billion-Euro Aid Offer
EINV/EPET: Russian Company Lukoil Interested in Repsol Stake
ECON/SCUL: Odyssey - Culture Ministry Reaffirms Opposition to
Negotiating
EFIN: Second Largest Real Estate Bankruptcy This Year
ENRG: Investors Buy Portuguese Wind Power Producer


Banks Take Advantage of Less than Half of GOS 5-Billion-Euro
Aid Offer

1.(U) Spanish banks and cajas (savings banks) took advantage
of less than half of the asset-purchase aid offered by the
GOS in a liquidity auction November 20. Out of the 5 billion
euros available, Spanish banks and cajas subscribed to only
2.1 billion euros. Experts speculated that banks did not
take advantage of this liquidity measure due to more
favorable options at the European Central Bank. Others
suggested that this low level of subscription was indicative
of a strong financial situation in Spain. The twenty-three
approved financial institutions taking advantage of this
offer included small and mid-size financial institutions such
as Caja Castilla La Mancha, Caja Duero, BBK, Kutxa, and
others. Another 5-billion euro auction is expected to occur
in December. (All media, 11/21)

Russian Company Lukoil Interested in Repsol Stake

2.(U) On November 19, the Russian company Lukoil, which
includes among its shareholders the U.S. company
ConocoPhillips, announced it was in negotiations to acquire
almost 30% of the oil and gas company Repsol. 20% would be
from troubled construction company Sacyr Vallehermoso, and
the rest would be from financial institutions. Lukoil is
reported to be willing to pay a premium of more than 100%
over Repsol's current stock market price. Press reports
noted that unlike Gazprom, which had expressed interest last
week in the Sacyr shares, Lukoil is not owned by the Russian
government. However, Industry and Commerce Minister
Sebastian said on November 19 that the GOS would do
everything possible to ensure that Repsol stays independent
and Spanish. Spanish political parties are expressing their
concern over the possible Russian purchase, although
President Zapatero said November 20 that he was "open" to the
deal, citing Lukoil's private status and U.S. shareholder.
(All media, 11/20 and 11/21)

Odyssey - Culture Ministry Reaffirms Opposition to Negotiating

3.(U) The Culture Ministry released a statement November 18
reaffirming that the GOS is not amenable to negotiating with
Odyssey over the remains of the "Black Swan" shipwreck, which
the GOS believes to be Spanish-flagged vessel Nuestra Senora
de Las Mercedes. This statement was released in response to
Odyssey's recent website statement indicating that it is
still hopeful that it can reach an amicable agreement with
Spain. On November 17, the American company submitted to the
Tampa Admiralty court its rebuttal to Spain's claim to the
Black Swan treasure find. (EFE, 11/18)

Second Largest Bankruptcy Filing this Year

4.(U) Real estate group Tremon announced November 17 that the
company had filed for administration of over 1 billion euros
in debt after failing to raise enough capital to meet debt
payments. Tremon is the second largest real estate company,
after Martinsa Fadesa, to seek administration proceedings
this year. Sixteen banks are particularly affected by this
filing, especially Banco Popular and Bancaja, which owned 200
million euros and about 100 million euros respectively of the
debt covered by the bankruptcy filing. The bankruptcy
proceedings only apply to the group,s real estate
development units and not to its hotel and leisure park
management businesses. Given the ailing housing market,

MADRID 00001226 002.2 OF 002


construction and real estate firms represent a quarter of all
those in default of debt payments, according to the GOS.
(All media, 11/17 and 11/18)

Investors Buy Portuguese Wind Power Producer

5.(U) The Spanish-Portuguese private equity firm Magnum
Capital purchased the Portuguese wind farm company Enersis
from the Australian firm Babcock & Brown for 1.15 million
euros. Enersis provides about a quarter of Portugal's wind
power, with 515 MW of installed wind capacity and 156 MW
under construction. Magnum's Spanish shareholders are former
directors of Banco Santander. BBVA and three Portuguese
banks funded the purchase. (El Confidencial, 11/17; El Pais
English; 11/18)
AGUIRRE

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