Five weeks ago The Slog opined that ‘Spain’s banking instability is as important as its poor sovereign access to the bond markets’. Over the last ten days, rumours have been circulating about the fortunes (or more accurately, misfortunes) of the giant Santander Bank. I have to date been unable to stand any of them up, but this morning around 6 am, Banco Santander SA’s third-quarter results displayed a 94% profits tumblefor all to see.

Santander is the eurozone’s biggest bank by some distance.  It’s Q3 net profit picture, however, is grisly in the extreme: it was decomated from €1.8 billion a year ago to €100 million now. As I also pointed out in September, it is the Caja (property) disaster in Spain that remains hidden, fudged or just plain misreported: Santander blamed higher than expected property provision in the home country.

Analysts were projecting results of around €1.23 billion, which just goes to show how much notice one should take of the average analyst. Certainly, the Slog’s two main Madrid sources saw this coming a mile off.

So, I might add, did Berlin….whose exposure to all this is also rather more than Geli and Wolfie are suggesting. Stay tuned, this is a building story that will accelerate before too long.

PS After a small ten bucks rally, gold is levelling out again at $1714.30 this morning. Keep an eye on it’s progress below $1700.