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Spain’s banks need up to 62bn euros in capital

Date: Friday 22 Jun 2012

Spain’s banks need up to 62bn euros in capital

Spain’s banks will need between 51bn and 62bn euros in additional capital in a worst case scenario, according to the independent consultants Oliver Wyman and Roland Berger hired by the government to perform a new round of stress tests on its financial sector.

Details on the capital needs of the 14 individual banks undergoing the evaluation were not revealed.

Bank of Spain deputy governor Fernando Jiménez Latorre and the secretary of state for economic affairs and support for business Fernando Restoy gave a press conference yesterday in Madrid.

They explained that the purpose of these tests was to provide an “estimate of the aggregate capital needs for the Spanish banking system as a whole under two different macroeconomic environments: one of them a baseline, considered most likely scenario, and an alternative severely stressed scenario.”

In the base case, Oliver Wyman calculates the capital needs at only €16bn to €25bn, while Roland Berger’s estimate settles at €25.6bn. In the adverse case, the capital needs are calculated as €51bn to €62bn and €51.8bn, respectively.

The government officials insisted that these last numbers were based on an economic deterioration that is “far from likely”. Oliver Wyman noted that the adverse scenario “appears reasonably conservative”, while Roland Berger qualifies the case assumptions as “harsh”.

The Eurogroup has already committed to providing the Spanish banking sector with up to €100bn in rescue funds. In this context, Spain’s minister of economy Luis De Guindos said in a separate interview that the government would make the formal request for the financing in the following days.

JM

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