Two Catalan banks fail the stress tests in worst case scenarios but would be approved if all provisions would have been taken into account

Unnim and CatalunyaCaixa would have 4.5% and 4.8% of core capital respectively. However, the provisions that all Spanish banks must have to face difficult times have not been taken into account as they did not exist in other European banking systems. With these funds taken into account, Unnim and CatalunyaCaixa would have approved the tests with 6.2% and 6.3% respectively. CaixaBank, the most important Catalan bank passes the test with 6.4%.


July 15, 2011 11:44 PM

Barcelona (ACN).- Unnim and CatalunyaCaixa are the two Catalan banks that have failed the European stress tests, but only in the worst possible scenario. The European Banking Authority (EBA) has graded Unnim with 4.5% of core capital and CatalunyaCaixa with 4.8% in the worst case scenario; in fact in the most positive cases, both banks would pass. The approval grade was 5%. However, the EBA has not taken into account some specific provisions that Spanish banks are obliged to keep for difficult times. The Bank of Spain, which imposes this generic provision, released its own grades, taking those funds into account. If those provisions would have been taken into account, Unnim would have been approved with 6.2% of core capital and CatalunyaCaixa with 6.3%. The rest of the Catalan banks have passed the stress tests in all possible scenarios. The largest financial institution in Catalonia and Spain’s third bank, CaixaBank got 6.4% in the worst case scenario. However, with the provisions, CaixaBank would have received 9.1%, which is considered an excellent grade. Barcelona-based CaixaBank is Europe’s tenth bank. Banc Sabadell got 5.7% and 8% with the provisions.

The Catalan savings banks that participated in mergers with other financial institutions from the rest of Spain also got positive results; although some are close to the risk zone. Once again, if provisions are taken into account, they would not be in trouble. One of these is Bankia, the project led by Caja Madrid in which Caixa Laietana participated. Bankia got 5.4% and 6.5% with the provisions. Mare Nostrum, with Caixa Penedès, got 6.1% and 9.3% with the provisions.

The EBA does not take Spanish banks’ provisions into account

The EBA did not take into account those generic provisions because other European banking systems do not have them and it considered the test criteria should be common for all the systems. However, not including those funds puts the Spanish banks in a worse position than the rest of European banks.