The collateral effects that the US subprime crisis may have in Spain are thought to be minimal. The Spanish regulator CNMV claims that less than 0.5% (EUR92m) of the nation's investment funds would be compromised in affected Special Investment Vehicles (SIVs) where US institutions piled mortgages off the balance sheet. SIVs were not developed locally given the central Bank of Spain required higher paid-up capital (8%) than other jurisdictions.

So if there was a crisis in Spain, it would not have the same origins as the US crisis because of the above and other stringent institutionalised controls in the financial sector such that a much higher percentage of loans (80%) are backed up with cash deposits from other bank clients.

Could a variant of that crisis affect the Spanish financial sector?

But if interest rates and inflation continue to rise beyond salaries, and the deceleration in the predominant construction sector continues, without other sectors of the economy having the ability to absorb that workforce, then the default rate on mortgage loans, currently at a low 0.76%, could increase sharply. Coupled with the banks' reduced liquidity in the current global conditions, then yes there could be problems.

We have already seen a rise in professional indemnity and fidelity claims related to the financial and construction sectors - but not so much in D&O non-disclosure/misrepresentation disputes as in the US or UK, probably due to the lack of local SIVs.

However, some argue that it will be in the months to follow the presidential election of 9 March when the full picture will be available for scrutiny.