The International Monetary Fund is urging Spain to take a page from Ireland and use an independent auditor to evaluate its banks, saying that could boost confidence. Speaking to reporters during the annual meetings in Washington, Antonio Borges, IMF’s European department head, said this should be the right thing to do, since financial market fears of the situation in many European countries have become “excessive,” especially in regard to Italy and Spain.
Borges said that steps taken by the Spanish government have been “very reassuring” but the country needs to make a “stronger effort” to make its struggling economy more export-oriented and further reform its banking system. He admitted, notwithstanding, that the situation of the Spanish banking sector is quite strong. Its very large banks have very strong positions in other parts of Europe, North and South America.
After IMF’s suggestions, Spanish government Spokesman and Development Minister, José Blanco, expressed his “deep trust” in Spanish banking sector’s solvency and reminded that among the 27 Spanish financial institutions (nine banks and 18 savings banks) participating in the stress-tests last July, only five savings banks fail to reach an adequate solvency level in a highly unlikely scenario of extreme economic adversity. A key reminder: the biggest percentage of financial institutions submitted to those stress-tests, approximately 30 per cent, were Spanish.