Spanish banks pass most stringent stress tests to date with no capital shortfalls

The capital shortfall the the 25 failing lenders have to face is €24.6 billion, but 13 of the banks have already issued part of it. Now,  requirements are of €9 billion and will only affect a dozen of small lenders, which have two weeks to present a plan to make up the shortage.

“These results confirm the enormous effort made by the Spanish banks of our association during the years of the crisis to preserve their balance sheet strength and maintain adequate levels of capital and provisions,” Spanish Banking Association Chairman José María Roldán stated in a press release, stressing out that “none of the banks belonging to our association has needed public aid to achieve this result, unlike many of their competitors.”

The ECB described the stress tests information that has been appearing in the media this week as “highly speculative.” As a matter of fact, many papers pointed that up to 11 banks would failed, when actually the leaks showed that the number went up to 25.

Since the capital requirements do not reach €25 billion and since 13 banks have already strengthen their capital in 2014, the final requeriments would be of €9 billion and would only affect a dozen of small lenders: Eurobank, National Bank of Greece and Hellenic Bank; the Italian Monte dei Paschi di Siena, Banca Popolare di Milano and Banca Popolare di Vicenza and Banca Carige, the Slovenian Nova Ljubljanska banka and Nova Kreditna Banka Maribor; the Portuguese Banco Comercial Portugués; the Austrian Oesterreichischer Volksbanken; the Irish Permanent Tsb and the Belgian Dexia.

The next step for these banks is to send the recapitalization plan to the ECB in the next two weeks. Then, they will have between six and nine months to cover their capital shortfalls.

Regarding the Spanish banks, the results of these stress tests have shown that they are in really good conditions and that they don’t need any additional measures to strengthen their solvency. Out of the 15 entities that have passed the ECB’s exam, only Liberbank has shown a capital shortfall os €32 million. However, thanks to the capital increase from last June, the exam is technically passed.

The other Spanish banks, BBVA, Sabadell, BFA-Bankia, Popular, Banco Santander, Banco Mare Nostrum (BMN), Bankinter, Ibercaja, Caixabank, Caja Rurales Unidas (Grupo Cajamar), Catalunya Banc, Kutxabank, Unicaja and NCG Banco (Abanca) have successfully passed (with high marks). Spain has been the second country, together with Italy, with the higher number of analysed banks. Germany presented 24 and France, 11.

Prime Minister Mariano Rajoy and the Governor of the Bank of Spain have expressed their satisfaction with theses tests.



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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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