IMF: Spain Needs To Continue, Deepen Financial Sector Reform

The International Monetary Fund said Wednesday that although Spain's largest banks appear sufficiently capitalized and have strong profitability to withstand a further deterioration of economic conditions, vulnerabilities remain in other banks that are reliant on state support.

The IMF said in a statement--following a visit to Spain by a delegation of its Monetary and Capital Markets Department--that although a major restructuring of the savings bank sector is taking place, "the capacity to cope with the needed adjustments differs significantly across the system."

The IMF said in its Financial Sector Assessment for Spain that the "sector as a whole remains vulnerable to sustained disruptions in funding markets."

"The assessment confirms the need to continue with and further deepen the financial sector reform strategy to address remaining vulnerabilities and build strong capital buffers in the sector," the IMF added.

"A carefully designed strategy to clean up the weak institutions quickly and adequately is essential to avoid any adverse impact on the sound banks. Furthermore, dealing effectively and comprehensively with banks' legacy problem assets should be the priority of the next stage of the financial reform strategy," the IMF said.

-By Santiago Perez, Dow Jones Newswires; (34) 91 395 8119; santiago.perez@dowjones.com

Caixabank (PK) (USOTC:CAIXY)
Historical Stock Chart
From Jun 2024 to Jul 2024