VZCZCXRO5514
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHMD #0969/01 2710616
ZNR UUUUU ZZH
R 280616Z SEP 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1276
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4135
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MADRID 000969 
 
SIPDIS 
 
STATE FOR EUR/WE, EEB/IFD/OMA 
COMMERCE FOR 4212/DON CALVERT 
TREASURY FOR OAI/OEE R.JOHNSTON 
ENERGY FOR PIA:K.BALLOU 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EFIN EIND EINV ELAB ENRG SP
SUBJECT: MADRID ECONOMIC WEEKLY, SEPTEMBER 21-25 
 
REF: A. MADRID 936 
     ¶B. MADRID 913 
 
MADRID 00000969  001.2 OF 002 
 
 
Contents: 
 
EFIN: Crisis Makes Cajas Owners of Troubled Real Estate 
EIND: Vehicle Production Increases in August 
EIND/ELAB: Projected Additional Layoffs at Figueruelas Opel 
Plant Spark Reaction 
EAIR: Low-Cost Airlines Overtaking Traditional Carriers 
ENRG/EINV: Iberdrola Gets Another $250M in U.S. Stimulus 
Grants for Wind Farms 
EFIN/EINV: Santander's Brazilian Subsidiary Plans Big Share 
Offering 
 
 
Crisis Makes Cajas Owners of Troubled Real Estate 
 
1.(U) Between December 2007 and June of this year, Spain's 
savings banks ("cajas") acquired 26 billion euros in 
property, mainly real estate from troubled construction and 
real estate companies.  (Comment: These purchases allow the 
cajas to avoid having to declare their loans to the companies 
as delinquent.  To the extent that they carry the properties 
on their books at higher-than-market valuations, it also 
allows them to delay addressing their problems.)  Because of 
their relationship with the construction sector, savings 
banks have acquired more real estate than have banks -- about 
three times as much, according to the Bank of Spain. (El 
Pais, 9/21) 
 
Vehicle Production Increases in August 
 
2.(U) The Spanish Association of Vehicle Manufacturers 
(ANFAC) announced that automotive vehicle production in 
August, at 77,000 units, was 47% higher than in August of 
last year.  The group attributed the increase to programs in 
various European countries that provide incentives for 
automobile purchases.  Based on the August figures, ANFAC now 
projects total vehicle production for 2009 to be 2.15 million 
units, 15% fewer than in 2008 but not as low a figure as 
originally expected.  Vehicle exports were also up in August, 
though over the course of the year they remain 25% below the 
first eight months of 2008.  (Europa Press, 9/23) 
 
Projected Additional Layoffs at Figueruelas Opel Plant Spark 
Reaction 
 
3.(U) News that layoffs at the Opel plant in Figueruelas near 
Zaragoza would likely be greater than previously  reported if 
the Magna consortium buys Opel from GM sparked a sharp 
reaction from workers.  Spanish press repeated news published 
in Germany that Magna plans to lay off 2,090 workers at 
Figueruelas, almost 500 more than originally estimated.  Even 
before this report, workers staged a demonstration last 
Saturday in Zaragoza.  Some Spanish workers participated in a 
mass demonstration in Antwerp on Wednesday against the 
planned layoffs, and another protest is expected this weekend 
in Spain.  Meanwhile, GM, citing continued low demand, has 
presented a formal order to lay off 600 workers from the 
plant between November and March.  With unemployment over 18 
percent and still rising, and persistent reports that 
economic recovery is not yet in sight, the government and all 
sectors of Spanish society are especially sensitive to 
prospects of further job losses. (El Pais, 9/23, 9/25) 
 
Low-Cost Airlines Overtaking Traditional Carriers 
 
4.(U) Spain is receiving fewer international visitors (nearly 
10% down from last year), and those making the journey are 
choosing no-frills airlines over traditional carriers. 
Figures from the Ministry of Industry, Tourism and Commerce 
show that through August of this year, 50.1% of visitors 
arrived on low-cost airlines.  This is the first time since 
the emergence of discount carriers in the 1990s that they 
have overtaken their competitors.  On a related note, in 
August, low-cost Irish airline Ryanair displaced Iberia as 
the leader in the domestic market.  All airlines are facing 
challenges due to the economic crisis, but the traditional 
carriers have lost nearly 13% of their passengers this year, 
compared to around 7% for their rivals.  (El Pais, 9/22; 
Expansion, 9/25) 
 
Iberdrola Gets Another $250M in U.S. Stimulus Grants for Wind 
 
MADRID 00000969  002.2 OF 002 
 
 
Farms 
 
5.(U) Over $250 million was approved by the Treasury and 
Energy Departments on September 22 for three grants to 
Iberdrola Renewables for wind energy projects in Iowa, 
Missouri, and Texas.  The funds are from a second 
disbursement of stimulus grants; Iberdrola received about 45% 
of the total granted in that disbursement.  Iberdrola had 
received $294 million in the first disbursement on September 
¶1.  The grant program has replaced earlier tax incentives for 
wind farms and covers 30% of the qualifying costs of 
investments.  (ABC, 9/23; Treasury statement, 9/22; Iberdrola 
statement, 9/23) 
 
Santander's Brazilian Subsidiary Plans Big Share Offering 
 
6.(U) The Brazilian subsidiary of Banco Santander will carry 
out a major IPO October 7 (on the NYSE) and 8 (on the Sao 
Paulo exchange) to fund expansion.  The operation is expected 
to raise between $6.3 and $7.3 billion for about 16% of the 
subsidiary's shares.  The value given the shares will make 
the subsidiary among the world's 30 largest banks by market 
capitalization and will mean that the subsidiary will account 
for a third of Santander's total value.  It will be the 
largest issuance of shares on the stock exchange in Brazil, 
and possibly the largest worldwide this year.  (El Pais, 9/22) 
 
CHACON