Spain's Position Is Strong: Santander Vice Chairman

Spanish yields have been rising in recent months amid market fears that Madrid could become the next target of the bond vigilantes, but Matias Rodriguez Inciarte, vice chairman of bank Santander, told CNBC Wednesday that Spain was different than other euro zone periphery countries.

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Some analysts predict that, if Portugal where to ask for assistance from the European Union and the International Monetary Fund, Spain will be next but Inciarte said the country's fiscal position is strong.

“We are witnessing a widening of the Spain this is not in relation to the real situation with Spanish debt...Spanish government debt is 20 percentage points below the average in Europe,” he told CNBC in an interview.

"I think there has been an increase in leverage in the private sector over the years, but you have to take into consideration that Spanish companies are well diversified internationally, so there are a number of assets that compensate this debt,” Inciarte added.

With the Chinese government snapping up bonds in the European market, Inciarte said the buyers, at these prices, will see a good return for their investment, particularly in Spain.

“The Chinese have a huge amount of reserves, which understandably they’d like to disperse and the Spanish market and Spanish government bonds provide for a very good opportunity in terms of the deals they could receive out of this investment,” he said.

“I understand their position as an investor. I think they are making the right decision” Inciarte added.

Common Euro Zone Bonds

The euro zone will have to issue common bonds, despite opposition from France and Germany, if it wants the euro to be strong, according to Inciarte.

Launching bonds backed by all members of the euro zone has been long under discussion but "core" countries, especially Germany, have opposed it because of fears the common bonds would weaken their fiscal discipline stance.

“This matter has to be carefully analyzed, looking to the future I think it is inevitable," Rodriguez Inciarte said in an interview.

A pan-European bond would sustain a strong currency and more uniform macroeconomic and fiscal policies, he explained.

“I would favor (it) in the medium to long term however I understand there are difficulties in the short term,” Rodriguez Inciarte added.

Santander Not Just Spanish

Late last year, Santander warned on profits as the Spanish regulator demand changes to the way bad debts where reported and weakness in its domestic market, but Inciarte said diversification has put his bank in a strong position.

“In Spain we get less than 20 percent of our net income, we get in excess of 20 percent in Brazil, 17 percent in the UK," he said.

"Inevitably the perception of the markets put us very close to Spain, so our share price has been affected by the fact of being in Spain; we hope the market will understand this diversification is a very positive aspect for Santander,” Inciarte added.

Having become a major player in the UK through takeovers at the bottom of the market, Inciarte said the mergers and acquisitions bankers can forget about Santander for a while.

“We have made important acquisitions in the recent past…we have to digest and integrate these acquisitions and this is our main task at hand,” he said.

- Watch the CNBC interview with Matias Rodriguez Inciarte above.