Spanish banking sector evaluations due today

Date: Thursday 21 Jun 2012

Consultancy groups Oliver Wyman and Roland Berger are expected to present their evaluations of the Spanish banking sector on Thursday to the Bank of Spain and the country's Finance Ministry.

Both firms were placed in charge of identifying the sector's capital needs under two different scenarios, a base case scenario that reflects the most probable situation and a stress scenario that assumes significantly lower real-estate prices. They were to analyse the credit portfolios of Spain's 14 largest banking groups, which represent 90% of the country's financial system.

On Wednesday, ratings agency Fitch released a special report in which it estimated Spanish bank loan losses in a revised "Irish stress scenario" that is based on what occurred in Ireland. Fitch calculates a potential capital shortfall of €90-100bn under this scenario and €50-60bn under a new base case scenario.

In the report, Fitch pointed out that not all banks face the same capital shortfalls. "Santander, BBVA, and La Caixa have sufficient preimpairment profit generation, reserves and capital to withstand Fitch's base case losses," Fitch explains.

According to Bolsamania.com, the Bank of Spain informed that the evaluations by the two consultancy firms will not necessarily be made public on Thursday when they are due.

MG

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