Spanish banks could need up to €62bn, independent auditors find

Spanish banks might need up to €62bn to complete the recapitalization process, according to stress tests conducted by independent auditors Roland Berger and Oliver Wyman.

“Under the baseline macroeconomic scenario, and a core capital ratio of 9%, the capital needs would be in the range of €16-26 bn.

Under the severe macroeconomic scenario and a core capital ratio of 6%, the capital needs for the Spanish banking sector as a whole would range from €51-62 bn,” the Ministry of Economy and the Bank of Spain said in a joint statement.

Previous estimates set the need in a €60 to €80bn range.
Fitch Ratings estimated that Spanish banks would need between €50bn and €60bn to cover their domestic loan portfolios.

The analysis complements a similar research done by the International Monetary Fund, and was carried on 14 Spanish banking groups, which represents around 90% of the financial system of the country.

The Spanish Government is now expected to formally present the request for EU assistance in the following days.

According to the statement, following the formal request negotiations on a memorandum of understanding with our European partners will begin.

“It is foreseen that the memorandum could be agreed between the Spanish and EU authorities within 3-4 weeks. During this period, the existing guarantee scheme for new liabilities will be prolonged, a recapitalization scheme will be submitted for approval to the Commission and contingency measures to address urgent problems will be put in place,” the institutions said.

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