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Spanish banking system’s stress tests show that CaixaBank and Banc Sabadell do not need additional funds

However, CatalunyaBanc would need a maximum of €10.83 billion in the most stressed scenario. According to the independent audit by Oliver Wyman, with KPGM, Deloitte, PwC and Ernst & Young, the Spanish banking system would need a maximum of €53.75 billion in the worst case scenario. 4 banking groups would concentrate 86% of these additional funds. In total, 7 banking groups would need additional funds, while 7 groups would be strong enough, with their own resources, to resist a hypothetical scenario with a 6.5% recession between 2012 and 2014, 27% unemployment, a 85% drop in land prices and a 55% decrease in housing prices.

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29 September 2012 02:00 PM

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ACN

Madrid (ACN).- The Spanish banking system would need \u20AC53.75 billion in the worst case scenario, according to the independent audit made by Oliver Wyman, in collaboration with KPGM, Deloitte, PwC and Ernst and Young. 7 banking groups would need these additional funds while 7 other banking groups would be strong enough to resist a major stressed scenario with their own capital. 4 groups would accumulate 86% of the \u20AC53.75 billion of additional funds required. The Catalan financial entities CaixaBank and Banc Sabadell are among those banks without the need for additional funds in the worst case scenario, which is extremely unlikely: a 6.5% recession between 2012 and 2014, 27% unemployment, a 85% drop in land prices and a 55% decrease in housing prices. However, CatalunyaBanc, which was intervened a year ago by the Spanish Government through the FROB (Fund for Orderly Bank Restructuring) would need \u20AC10.83 billion in the most stressed scenario. On Friday afternoon, the Bank of Spain and the Spanish Government presented the results of the second phase of the independent detailed audit of the entire Spanish banking system made by Oliver Wyman. The first phase was presented in June. Oliver Wyman and Roland Berger calculated back then that Spanish banking would need between \u20AC51 billion and \u20AC62 billion. The definitive amount is \u20AC53.745 billion, while the European Union has authorised \u20AC100 billion funds for a hypothetical bailout of the Spanish banking system. Now that the exact amount Spain\u2019s banks will need to strengthen their core capital and face hypothetical losses is known, it is expected the Spanish Government will very soon release the exact amount requested to Brussels. The Spanish Deputy Minister for Economy and Business, Fernando Jiménez Latorre, stated on Friday that the requested amount might be around \u20AC40 billion.


Fernando Jiménez Latorre has presented the results of the independent audit together with the Deputy Governor of the Bank of Spain, Fernando Rostoy. The audit has shown that Spain\u2019s main three banks will have no problems at all facing a very difficult scenario in the next 3 years. Barcelona-based CaixaBank, which is the largest bank in Spain, would have a \u20AC9.42 billion reserve in the worst case scenario. Santander bank would have a \u20AC25.30 billion buffer and BBVA a reserve of \u20AC11.18 billion. The Catalan Banc Sabadell, which is much smaller than the three banking giants, would have a reserve of \u20AC915 million. The other groups not needing additional funds which would have significant reserves in the case of an economic cataclysm are Kutxabank (\u20AC2.19 billion), Bankinter (\u20AC399 million) and Unicaja (\u20AC128 million).

The other side of the coin corresponds to the seven banking groups that would require additional funds in the most stressed hypothesis. Madrid-based Bankia is at the top of the bad pupil list with a need of \u20AC24.70 billion. It is followed by the Catalan entity CatalunyaBanc, which would need \u20AC10.83 billion. Banc de València (with \u20AC3.46 billion) and Novagalicia Banco (with \u20AC7.18 billion) complete the group of 4 banks that make up 86% of the \u20AC53.75 billion required by the entire system. All these 4 banks have been nationalised by the Spanish Government, having intervened through the FROB mechanism. The other 3 banking entities needing funds are Banco Popular (\u20AC3.22 billion), Banco Mare Nostrum (with \u20AC2.21 billion) and the group formed by Ibercaja, Caja3 and Liberbank (needing \u20AC2.11 billion).

Rostoy stated that \u201Cwe sincerely believe that as a consequence of the restructuring actions on the Spanish banking system, it will be strongly capitalised and completely restructured\u201D. Spain will therefore have \u201Ca more efficient and stronger\u201D banking system, which will \u201Ccontribute to the economic recovery\u201D. Jiménez added that \u201Cat the end of this process we will have a strong financial system that will allow credit to flow towards the economy\u201D.

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  • CaixaBank's headquarters, located in Barcelona's Diagonal Avenue (by ACN)

  • CaixaBank's headquarters, located in Barcelona's Diagonal Avenue (by ACN)