Crisis? What crisis?

"Jen crisis? Quien esta crisis?" uttered Emilio Botin, president of Santander Bank on the finalisation of his fantastic acquisition of the British high street bank Alliance and Leicester at about half the price he would have paid less than a year ago.

Botin has proved all his critics wrong in his quest to turn his bank from a domestic minnow into Europe's second largest. He has established himself as the wiliest of deal-makers by a string of audacious takeovers which included the famous Abbey National operation and which might soon also include Italy's oldest and highly respected bank Monte dei Paschi di Siena.

Santander has been a rare winner in this present crisis. It has hardly been touched by the credit crunch, and it has swooped on its victim with an audacity only matched by the rise and rise of HSBC during these last 15 years. This year has been one of outstanding pain for the world's leading banks, but it has not been so for Santander or for HSBC, the bank which now commands about half of Malta's economy. This has been a year which has seen the shockwaves from the housing bank policy disaster of Fannie Mae and Freddie Mae. This was best analysed by world famous economist Paul Kingman in the New York Times in an article which has been acclaimed and read all over the world, not least in Spain. It is that country, more than any other in Europe, where real estate development is the flywheel of the economy.

It also happens to be the one which has furnished the outstanding banker Botin, who outdid all the world's bankers with his prowess to turn crisis into victory. If all goes well with Botin's health, the world and Europe in particular, will hear more of Santander. Every serious investor should monitor its share price daily.

Malta's real estate performance is resilient, in spite of the fact that our property prices seem to be way above the cost of construction (thanks to a strong influx of immigrant labour). This deserves a salute from all those who care about the health of the Maltese economy. In the present world economic crisis, people have cut their expenditure on everything but they have not foregone holidays.

Malta is indeed lucky, but it will not continue to be so if it does study well how real estate in a country like Spain got into trouble, bringing down several banks, and how a bank like Santander managed not only to beat the crisis, but also to turn the world banking troubles to its manifest advantage.

For several reasons the Santander share price will probably continue to forge forward. Its advantages are very similar to those which will also probably make HSBC a world success over the coming years. Santander is not a domestically focused bank. It has escaped fairly unscathed from the devastation caused primarily by the banking debacle of Fannie and Freddie, because it has no significant investment banking business.

It has also steadily marked down its dependence on Spain, with less than a third of its profits coming from that country. These came mainly come from Latin America, particularly Brazil. Bold and canny deal-making have enabled Botin to make his bank, which started from modest beginnings, into the third biggest player in that part of the world. Brazil is expected to register for nearly half of Santander's income from Latin American.

Fannie and Freddie, incidentally, owe their origin to the needless catastrophic decline of the US economy in the 1930s. It was so needless that the great Roosevelt at the time declared: "The only thing we have to fear is fear itself". Fear is equally needless this time round. These two banks have had financial shortcomings which amounted to 40 per cent of US GNP. The difficulties have been overcome. One need only study the article of world famous economist Krugman, which has had a worldwide circulation to see that.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S&P.

johnazzopardivella@hotmail.com