Spanish banks will use their own resources to get the 26,121 million euros needed according to the new rules

The Spanish stock exchange celebrated the European Summit’s results by increasing 4.96% in a one day of trading. The main managers of the Spanish banks are convinced they will get the requested core capital with their own resources. In addition, they believe they will need 13.5 billion euros, and not 26.1 once the detailed calculations are made. Spanish financial circles consider the new rules, adopted to counteract French and German banks’ exposition to Greek sovereign debt, do not particularly benefit Spanish banks, which almost do not hold any Greek debt. In addition, as was the case with the stress tests, the criteria to analyse the bank situation ignores Spain’s proposals and imposes those benefiting German banks.

CNA

October 27, 2011 11:43 PM

Barcelona (ACN).- The European Summit ended on Thursday morning with the announcement that Spanish Banks would need to obtain 26.121 billion euros before June 30th 2012 in order to strengthen their core capital. The main managers of the Spanish banks reacted calmly to the news during the day, confident they will be able to get the required money to reach the requested 9% of core capital. Furthermore, the Bank of Spain stated it “reasonably” believes that Spanish banks will reach the European Summit’s objectives. The Spanish stock exchange experienced its second best day of the year. The Ibex-35, grouping the 35 largest companies trading in the Spanish market, grew by 4.96% in only one day, reaching 9,270 points. The Spanish banks BBVA and Banco Santander improved their trading by 10.21% and 7.53% respectively, showing the trust of investors in the two main pillars of Spain’s banking system. In fact, on Thursday Spain’s bank regulator considered the European Bank Authority’s (EBA) figures released this week to be “provisional”, as further calculations are needed.


Spanish financial circles think the need of the Spanish banks could be even half the quantity calculated this week by the EBA, being 13.5 billion euros and not 26.1 billion euros. In addition, some financial analysts consider the criteria used by the EBA to analyse each bank’s condition id for the benefit of German and French banks, and to the detriment of those in Spain, as they do not take into account money provisions and convertible bonds, easily added to the bank’s core capital. In addition, the general sovereign debt depreciation has been made to reduce the weight of Greece’s sovereign debt in the banks’ accounts, but Spain’s banks almost do not hold such bonds, contrary to that of France and Germany. A similar situation happened with the stress tests, when the criteria proposed by Spain were ignored and those benefiting German and French banks were imposed. However, the result is that, despite the large numbers announced, Spanish banks are confident.

The Bank of Spain is confident that the Spanish banks will not need to apply for public money or the funds available to restructure the sector in order to fulfil the new core capital requirements. According to the EBA estimations Banco Santander needs 14.971 billion euros; BBVA, 7.087 billion; Banco Popular, 2.362 billion; Bankia, 1.140 billion; and, the Catalan CaixaBank, 602 million euros. The Catalan financial entity already communicated to the Spanish Stock Exchange Regulation Authority (CNMV) that it will fulfil the new requirements “in due time” and “through its capacity of capital organic generation”. Caixabank already had an 8.9% core capital ratio, just below the 9% required. The Catalan bank has thus 8 months to reach the objective, which could even be less money after the detailed calculation will be released by mid- November.