Finding a good Spanish brokerage

Coming from the land of $7 stock trades, it’s been quite a shock for me to see the fee sheets of most brokerage accounts here in Spain. Since for US tax reasons it’s extremely unadvisable for US residents/citizens to buy foreign mutual funds, the only real alternative for foreign equity is to directly buy foreign stock.

So I asked my friendly bank manager about opening a brokerage account. Things looked ok until I looked at the fee sheet. For buy stock on a European exchange, you pay:

• Transaction value fee: 10 euros + 0.16% with a maximum of 30 euros
• Transfer fee: 0.5% on purchases, 0.3% on sales (minimum of 12 euros)
• Mail fee: 0.32 euros
• Broker fee: 0.1% (minimum of 17 euros)
• Exchange fee: 15 euros
• Custodial fee: 3 times a year you pay 0.35% of the value of all the stock you own.

So say I buy 100 shares of Danone for 4644 euros. That would be:

17.43 + 23.22 + 0.32 + 17 + 15 = 72.97 euros commission! (plus the same again to sell)

Jesus fucking Christ on a camel…

So basically you’d lose 3% + 1% per year of your money just in transactions fees.

It appears there are some good alternatives. I am currently looking at http://selfbank.es, which is a joint venture between La Caixa and Societe Generale. Still not as good as E-trade, but an improvement.

If anyone has any other suggestions or experiences with the Self Bank brokerage, I’d be happy to hear them.

Bank run on Caja Mediterraneo?

The Banco Base fusion collapsed the other day, leaving CAM begging for government money. It’s obvious to anyone who has driven through Alicante and Valencia that there must be huge losses sitting on someone’s balance sheet. I remember commenting on the unfinished buildings dotting the landscape around Sant Cugat to my father-in-law, and he thought that it was nothing compared to the wastelands in Valencia.

Given the volume of freaked out calls from my family in-law about CAM, I’m starting to wonder if CAM is going to start seeing a flight of deposits soon. The 100,000 euro government deposit guarantee should cover most people, and it’s unlikely that there’d be much disruption of services in the case of a forced takeover. I am kind of happy that I managed to get rid of those CAM bonds at face value last year after an overly eager bank manager unilaterally decided that they would make a great investment for me.

If you are thinking of panicking (remember the old saying, if you are going to panic, panic early) and pulling your money out, the best way is generally to have your new bank “suck” the money into your new account, rather than trying to do it the other way around.

More on cheating to get into the right school

Today the English version El Pais had an article (looks like a recycled version of this one in Spanish) about desperate parents hiring detectives to prove that other parents were cheating on their applications. From reading the article, a couple things jumped out:

• The consequences to cheating are almost nil. Even when other parents reported cheating to the authorities, they weren’t interested in pursuing the case.

The Madrid Education Board also says that it is “unable” to investigate suspicion of fraud. It says the responsibility lies with Madrid’s town halls to make sure that people do not falsely register themselves

• In one case, a father was taken to court by the tax authorities for falsifying his address. He was given a whopping 80 euro fine and said “It is the best thing that I have ever done, and I would do it again”. (His kid got to stay in the school he cheated to get into)

As to why cheating is so widespread, I think the simplest explanation is that people base their willingness to cheat on the perception of that other people are cheating.

One or two stories like this, and who would want to be the honest sucker who has to drive their kids to the other side of town, just so a bunch of cheaters can get their kids into the school they want.