Markets more upbeat about Spain, says Santander's Botín

Emilio Botín, the chairman of leading Spanish lender Santander, said Thursday Spain's international image had improved a "great deal" recently after the latest series of initiatives by the government.

The doyen of the Spanish banking sector said the domestic economy, which has been limping along for the past year after emerging from its worst recession in decades, could now take a turn for the better after the administration of Prime Minister José Luis Rodríguez Zapatero had bitten the bullet and adopted the reforms that were needed.

The government has overhauled the country's pension system, raising the retirement age to 67 year from 65 years, and has ordered the country's banks to increase their minimum core capital ratio to 8 percent from 6 percent in order to dispel doubts about their solvency.

"We have noted a very clear change in perceptions of Spain in the past month and a half," Botín said at a presentation of Santander's earnings for last year.

Describing the latest government measures as "magnificent" and lambasting doubts about Spain as "absolutely exaggerated," Botín said the push to increase the solvency of the banks was a "very positive step" for the economy.

Santander's earnings last year fell 8.5 percent to 8.181 billion euros due to higher provisions for asset impairment and bad loans and tougher accounting criteria imposed by the Bank of Spain, along with weakness in Spain where profits fell 38 percent. That was offset by strong growth in Latin America, particularly Brazil where attributable profit rose 31 percent to a record 2.836 billion euros.

Santander reported potential doubtful loans of 17 billion euros, 7 percent of its total portfolio. The non-performing loan ratio rose slightly from a year earlier to 3.55 percent.

Its core capital ratio rose 0.3 points to 8.8 percent and Santander expects this to increase further to over 9 percent by the end of 2011.