Banco Santander SA (SAN)

Would prefer a local bank in Spain for a Spanish bank. There are less than 10 Spanish banks left standing. Now you have a consolidated industry, plus in an economy that was on its knees until about 6 months ago. Prefers others for global banking exposure.

Spanish bank with a lot of Latin America exposure as well. Great yield. Has never taken any government money and hasn’t cut the dividend. Has a big operation in Brazil. Has flexibility because it does have international operations. Very big in the UK and in northern Europe as well. Thinks it can reach the Basil requirements with no problems.

(Market Call Minute) More equity raises ahead of them and prefers others.

The challenge you have with the Spanish banking sector is that they are not selling down their troubled assets. The real estate is staying on the books. This is a direct analogy to the Japanese banks when they went into their 20 year hole. If you don’t clean up the balance sheet, you can’t lend and consumers can’t be reset to a new level. Very, very tough situation.

Hold a core position in these European banks. Trim on the rise and then hold the rest. Did not take European TARP money. You just need a slight turn in the Spanish market and this one will benefit.

Fantastic run. This is a dash to the trash, a Spanish bank. Has been a recovery but non-performing loans in Spain continue to go up and housing has bottomed but not going up.

The Spanish economy has bottomed and is unlikely to get much worse. A Spanish headquartered bank but has businesses across Europe as well as in the US and a significant exposure to Latin America. The problem is its emerging-market exposure. Also, the dividend of about 11% is too high and it will have to be cut. Would rather focus on other banks in Europe. (See Top Picks.)

Largest private sector bank in Spain. Have had their challenges in recent years, particularly in having to repossess huge buildings of euro’s worth of real estate and bring it onto their books. Dividend yield looks very attractive but that will get cut at some point as the payout ratio is not sustainable. There is still significant risk in the private banking business in Spain. Not particularly cheap.

Has had a nice relief bounce off its lows, like many of the European banks. Spanish economy is still facing many, many challenges and he expects they will ask for a bailout. This is a short-term trading stock as opposed to a stock for investment.

(Market Call Minute) Stay away from Spanish banks.

Very large Spanish bank. Spain has been in great distress in the last little while and has been promised money from the EU to support their banks. Spain has gone through a massive real estate bubble where lending standards fell apart and a lot of these people are under water so that is going to take a long process. Better places to be that are further along the curve on restructuring the banks. If you own, he would sell because you certainly have a chance to buy it back.