€100bn enough to support Spain’s banks until 2013, says S&P

The €100bn facility agreed between Spain and the EU will be enough to cover the potential capital needs of the Spanish banking system for 2012-13, according to Standard & Poor’s report ‘Spain’s EUR100 Billion Bank Bailout Relieves Near-Term Uncertainties But Details Remain Sketchy.’

“Based on currently available information, and all other things being equal, we do not anticipate an immediate impact on our ratings on Spanish banks due to the €100bn support line,” the rating agency said in a statement.

Credit analyst Elena Iparraguirre said that there is still uncertainty about the bailout implementation details, particularly regarding provisioning and capital requirements and the implications of the outcome of independent reviews currently underway.

“We are sceptical about the bailout being able to reduce the financial system’s funding challenges in the short term, as well as on lending resuming any time soon,” the agency said.

Given the uncertainties about the full details of the bailout, Standard & Poor does not rule out the possibility of a revision of its assessments of the stand-alone credit profiles (SACPs) for some banks.

“Changes in provisioning or capital requirements could have an impact on the banks’ financial profiles and on the actions they may take, even if they are unlikely to alter our estimates of the banking system’s credit losses in 2012-2013,” the company said.

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