CaixaBank, BBVA and Santander resist the stress test and would not require bailout money

Independent auditors state that in the worst possible scenario the Spanish banking system would need up to €62 billion. The Eurozone agreed to put at Spain’s disposal up to €100 billion if needed. In the most likely scenario, the Spanish banking system would require between €16 billion and €25.6 billion. Within the most stressed case, Spain’s three main banks would have enough resources of their own to face difficulties and would not need any additional funding. They are the Barcelona-based CaixaBank and the two international giants BBVA and Banco Santander.


June 22, 2012 01:05 AM

Madrid (ACN).- The two independent auditors hired to examine the Spanish banking system have released the first results, which were presented on Thursday afternoon in Madrid by the Spanish Deputy Minister for Economics and by the Bank of Spain Deputy Governor. In a situation of extreme stress, which would be the worst possible scenario according to the auditors, the Spanish banking system would need up to €62 billion at the most, although €51 billion might already be enough. The two independent audit companies Oliver Wyman (from the US) and Roland Berger (German) have given similar but different data. Wyman concluded that within a maximum stress scenario, Spanish banks combined might need between €51 billion and €62 billion, while Berger stated they would need €51.8 billion. However, since the Spanish banking system is heterogeneous, the three main banks would not require any money from the bailout even in the worst case. The Catalan CaixaBank –which is the first financial entity within the Spanish market– and the two world giants BBVA and Banco Santander would have enough with their own resources to face a scenario with a deep recession and a depreciation of 60% of housing prices and 90% of land prices. The Spanish Government and the Bank of Spain insisted that this worst-case scenario is extremely unlikely, but using it as a reference is reassuring as if things take a turn for the worse, the Spanish banking system will resist. The Eurozone agreed to put at Spain’s disposal up to €100 billion to rescue its banks if they were needed. It seems that if the crisis shows its worst face, and with 62% of the loan Spain would capitalise and restructure all its banks. In the most likely scenario, again the auditors did not coincide in an exact figure. Oliver Wyman stated that an amount between €16 and €25 billion would be needed, while Roland Berger concluded there will be €25.6 billion.

Barcelona-based CaixaBank, BBVA and Santander will not require any money from the bailout, no matter if the situation gets worse. They are strong enough to resist any severe stress with their own financial resources. In fact, most of the bailout money would be for the four banks already intervened by the Spanish State through the FROB (Fund for Orderly Restructuring of Banks), ensured Fernando Jimenez Latorre, Deputy Minister for Economics, and Fernando Rostoy, Bank of Spain Deputy Governor. They are Bankia, CatalunyaCaixa (and CatalunyaBanc), Novagalicia Bank, and Banco de Valencia.

However, the report did not give any concrete figure per bank. This information will have to wait until September. Nonetheless, Latorre explained that there will be a third group of banks that might need to reinforce their capital but that are likely to be able to do it on their own. Latorre explained that they are given 9 months to look for additional capital, which is “more than a reasonable” amount of time, he said.