Tags: Spain | banks | stress | test

Audit: Spain's Banks Need $76.3 Billion to Cover for Economic Downturn, as Expected

Friday, 28 Sep 2012 01:00 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The Bank of Spain said Friday an independent audit of the country's troubled banks shows they would need an extra 59.3 billion euros ($76.3 billion) to cover for further economic shocks.

The stress tests' findings, released by consultants Oliver Wyman, will help the country decide how much money it will tap from a 100 billion euro European loan facility offered back in June to prop up its financial sector.

Spain's banks have been struggling under the weight of toxic assets stemming from the collapse of the country's property market in 2008. Saddled with these bad loans and failed building projects, the country's banks have been reluctant to loan out more money to businesses and households, stunting the economy. The European loan facility is to be used to cover these bad loans and shortfalls, thereby freeing up the banks to do business again.

The Bank of Spain's figure does not include the impact of ongoing banking mergers or taxation. Including those two elements, the shortfall drops to 53.7 billion euros.

Bank of Spain deputy governor Fernando Restoy said some 400 auditors went through the books of 14 lenders — about 90 percent of the Spanish banking system — analyzing their capital cushions under adverse scenarios.

"We wanted (the tests) to be the toughest ever," Restoy told reporters at a news conference.

Jean-Claude Juncker, head of the eurozone group of countries, said he was "comforted" by the results, saying the €100 billion earmarked to help Spanish lenders "should be more than adequate" for their capital needs.

The agreed aid "should ensure that the recapitalisation process of banks can proceed efficiently and in accordance with previously agreed timelines," Juncker said in a statement.

While European stock and bond markets were closed, the euro edged up — to $1.2875 from $1.2860 before the release of the stress test results.

The European Commission said the tests were "a major step in implementing the financial-assistance program and toward strengthening the viability of and confidence in the Spanish banking sector."

It said in a statement that recapitalization of a first group of banks is scheduled to occur by November, following approval by Spanish and European authorities.

Restoy said the lenders needing to shore up their capital will have to tell the government whether they need public aid or intend to raise their own funds.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved