Ana Patricia Botin becomes the most powerful woman in European banking, succeeding her father as chairman of Banco Santander SA. (SAN)

Santander’s board named Botin, 53, to the top executive post at Europe’s second-biggest bank by market value. Botin replaces her father, Emilio, who died of a heart attack Sept. 9 at the age of 79.

Ana Botin, the eldest of six children with 26 years of service at Santander, takes over at the bank with 1.2 trillion euros ($1.6 trillion) of assets and lending operations in markets from the U.K. to Brazil, the U.S. and Poland as well as Spain.  The Botin family owns 2 percent of the bank and has helped run it since at least 1895.

“Family ownership has been a blessing,” said Peter Braendle, who manages 500 million euros in European equities, including Santander, at Swisscanto Asset Management AG in Zurich. “Ana has had a preparation that didn’t start five years ago. It began a long time ago and it was clearly very carefully planned.”

After joining Santander in 1988, she led acquisitions in Latin America in the 1990s and ran the Banesto Spanish retail unit before becoming CEO of Santander’s U.K. unit in 2010. The British business has been driving the bank’s return to earnings growth as Santander’s home market emerges from an economic slump.

Santander shares have climbed 42 percent since Marin was named CEO, compared with an 19 percent gain in the benchmark STOXX Europe 600 Banks Index over the same period.

The mother of three also said she wanted women to have the same opportunities as men. At Banesto, which she was running at the time, she tried to avoid having the bank hold meetings after 7 p.m. to prevent disruption to families.

She was educated at Santander’s Slaves of the Sacred Heart school and also in Switzerland and the U.K. and excelled at golf, becoming Spain’s junior champion in 1973 and 1974. She speaks five languages and graduated in economics from Bryn Mawr College in Pennsylvania.

In her new post, she’s assuming the most senior executive role by a woman at a large European bank. Lenders in Europe had almost no women in their top management teams at the onset of the financial crisis. While that is changing, their corporate-suite rise has been slower than in industries such as consumer goods and energy, McKinsey & Co. data show.

At the euro-area’s 10 largest banks by market value, women held about 5 percent of key executive jobs as of February, according to their filings. That was a third of the proportion at their 10 largest U.S. counterparts, which had 16 percent. Still, no woman has landed a chief executive job at any of the 10 largest U.S.-based banks that aren’t subsidiaries of foreign lenders.

Botin took over the U.K. unit after Antonio Horta-Osorio resigned to become CEO at Lloyds Banking Group Plc. Lower funding costs and efforts to win market share in higher-yielding small-business loans have propelled profits at the unit, which is now Santander’s biggest earner, contributing a fifth of profit compared with 19 percent for Brazil.

Barry Ritholtz writes:  The biggest reason so many financial felons escaped justice was that they dumped the cost of their criminal activities on the shareholder (never mind the taxpayer).

Countries don’t break up every day, particularly those as large and prosperous as the United Kingdom of Great Britain and Northern Ireland.  But it is possible that, two weeks from now, the headline writers will be calling it the “Disunited Kingdom” if the Scots vote for independence in a referendum on September 18th.

For much of the year, markets have been ignoring the vote, largely because the No side has been consistently ahead. But the latest polls have been narrowing, putting the No vote just six points in front – within a plausible margin for error (remember all those 2012 polls showing Romney heading for the White House). Even a narrow No victory might be unsettling, implying the likelihood of a further vote in a few years’ time. So the markets are having to contemplate what the financial consequences might be; sterling recently reached a five month low against the dollar.

The issues, for those non-Britons who have not been following the debate, are fourfold. What currency will the Scots adopt? The Yes campaign says they will keep the pound, the Westminster parties say this is out of the question (essentially this would recreate the euro problem, in which monetary union would exist without political union.  The EU could insist, as it does with other new nations, that the Scots agree eventually to join the euro. The pro-independence group says EU spokesmen are wrong (Scots are already in the EU so would not be be new members) and that the English parties are bluffing. An independent Scotland can call the bluff of the rest of the UK by taking a hard line on the second big issue – the allocation of national debt. How should this debt be apportioned among the rump UK countries? By population? By GDP? If Westminster plays hard ball, the Scots could walk away altogether (although this sounds a bit like a bluff as well; the consequences for the new state would be stark, in the short term).

Both of these issues are big areas of uncertainty that will cause market concern if the Yes campaign wins. The remaining two financial issues are probably less market-sensitive but are still significant. How will the Scots manage their finances without the public spending support of the rest of the country?  Or as the pro-independence campaign would put it, how will the rest of the UK survive without the revenue support provided by Scottish oil? There could be some long and complex negotiations on these two issues.

Such negotiations may be made even more difficult by the implications for the Westminster parliament. Scotland contributes 59 of the 650 MPs, of which 40 are Labour, 11 LibDem, 6 Scottish Nationalist, 1 independent and only 1 Conservative.

So how would the markets react to independence? The immediate reaction would probably be to sell sterling.  UK government bonds (gilts) would probably weaken as well. For a start, it is not clear how the debt split would be practically acheived.

Then there is the banking sector. Some of Britain’s biggest banks are Scottish-based. Will English depositors be happy to hold their money in a foreign bank (the Icelandic example is not a good one)? Mr David Owen thinks that some banks will quickly move their domicile to London.

Detroit is the largest city ever to seek bankruptcy protection, so its bankruptcy is seen as a potential model for other American cities now teetering on the edge.  But Detroit is really a model for how wealthier and whiter Americans escape the costs of public goods they’d otherwise share with poorer and darker Americans.

Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan is now weighing Detroit’s plan to shed $7 billion of its debts and restore some $1.5 billion of city services by requiring various groups of creditors to make sacrifices.  Among those being asked to sacrifice are Detroit’s former city employees, now dependent on pensions and healthcare benefits the city years before agreed to pay. Also investors who bought $1.4 billion worth of bonds the city issued in 2005.

Both groups claim the plan unfairly burdens them. Under it, the 2005 investors emerge with little or nothing, and Detroit’s retirees have their pensions cut 4.5 percent, lose some health benefits, and do without cost-of-living increases.

No one knows whether Judge Rhodes will accept or reject the plan. But one thing is for certain. A very large and prosperous group close by won’t sacrifice a cent: They’re the mostly-white citizens of neighboring Oakland County.  Oakland County is the fourth wealthiest county in the United States, of counties with a million or more residents.

In fact, Greater Detroit, including its suburbs, ranks among the top financial centers, top four centers of high technology employment, and second largest source of engineering and architectural talent in America.

The median household in the County earned over $65,000 last year. The median household in Birmingham, Michigan, just across Detroit’s border, earned more than $94,000. In nearby Bloomfield Hills, still within the Detroit metropolitan area, the median was close to $105,000.-

Detroit’s upscale suburbs also have excellent schools, rapid-response security, and resplendent parks.

Forty years ago, Detroit had a mixture of wealthy, middle class, and poor. But then its middle class and white residents began fleeing to the suburbs. Between 2000 and 2010, the city lost a quarter of its population.

By the time it declared bankruptcy, Detroit was almost entirely poor. Its median household income was $26,000. More than half of its children were impoverished.

That left it with depressed property values, abandoned neighborhoods, empty buildings, and dilapidated schools. Forty percent of its streetlights don’t work. More than half its parks closed within the last five years.

Earlier this year, monthly water bills in Detroit were running 50 percent higher than the national average, and officials began shutting off the water to 150,000 households who couldn’t pay the bills.

Buried within the bankruptcy of Detroit is a fundamental political and moral question: Who are “we,” and what are our obligations to one another?  Are Detroit, its public employees, poor residents, and bondholders the only ones who should sacrifice when “Detroit” can’t pay its bills? Or does the relevant sphere of responsibility include Detroit’s affluent suburbs — to which many of the city’s wealthier resident fled as the city declined, along with the banks that serve them?

Judge Rhodes won’t address these questions. But as Americans continue to segregate by income into places becoming either wealthier or poorer, the rest of us will have to answer questions like these.

Mojmir Hampl writes:  The BIS has a right to be heard. It exists not just to represent central banks, but also to offer ideas and intellectual feedback. Indeed, it serves policymakers well by challenging, debating, and perhaps swaying opinion. Rather than bash the BIS, monetary authorities should be grateful for the informed perspectives that it provides. Central bankers have become public figures who play the press for attention.  This can be dangerous and warrants counter balances.
Bank for International Settlements

The ECB (European Central Bank) action announced today is not QE (quantitative easing) in the form it has been customarily used. Instead of boosting weakened banks with expanded reserves with the expectation that lending will then be increased, the ECB is injecting money directly into the real (non-financial) economy by purchasing ABS (asset backed securities) and covered bonds. More ‘behind the wall’.

The ECB “will purchase a broad portfolio of simple and transparent securities,” Draghi said at a press conference in Frankfurt today. “Some of our council were in favor of doing more than presented.”

Big step toward QE, although Germany is not quite on board.  People have expected this, but not quite yet.

Dick Ehnts writes:   Unprecedented monetary stimulus has cut the spread between lending rates and deposit rates at Mitsubishi UFJ Financial Group Inc. to a record low in the first quarter. Cash and deposits at the nation’s biggest bank and its two closest rivals piled to 82 trillion yen last quarter. Citigroup is considering a retreat from Japan after pulling back from retail banking in markets with low returns, including Spain, Greece and Turkey.

Difficulties making money probably have something to do with the weak demand for loans in Japan. For the last 20 years, the private sector has been reducing its liabilities. To make up for the shortfall in effective demand, government spent hundreds of billions of yen to keep the economy at somewhere close to full employment. Compared with what Spain and Greece are going through it has so far been a resounding policy achievement.

However, government bonds are boring for bankers, especially if the central bank buys them up and clearly fixes the prices (which it does anyway, but it is more obvious now in Japan then ever). There does not seem to be any indication that this will change in the near future, especially not after the unsurprising big dent to GDP growth after the latest tax hike.

George Soros has made almost $1 billion since November from bets that the yen would tumble, according to a person close to the billionaire’s $24 billion family office.

The Japanese wager helped the firm return about 10 percent last year and 5 percent so far this year. The yen has weakened 17 percent versus the dollar since about the start of the fourth quarter, the worst performance over a similar period since 1985.

With no further weakening of the yen in sight, bankers and central bankers in Japan might as well enjoy a vacation or two. Probably it would be their first since ‘the crisis’ which started in 1991. They could try to think about a new concept to describe what has happened to Japan and discuss existing economic theories in order to solve the countries economic woes. One hint: another tax hike is not a good idea. Another hint: it is not a problem of social justice or the budget.