--Spanish banks need up to EUR62 billion in stressed
scenario
--Capital needs likely to concentrated among banks already in
hands of Spanish bailout fund
--Spain's largest three banks won't likely need new capital
(Adds details throughout)
By Jonathan House
MADRID--Spanish banks need up to 62 billion euros ($78.66
billion) in new capital to absorb losses in the coming years,
according to two independent analyses that will serve as the basis
for a government request for European Union aid to help finance a
clean up of the local sector.
Spanish officials Thursday said consultancy Oliver Wyman of the
U.S. estimates Spanish banks would need between EUR51 billion and
EUR62 billion in an adverse economic scenario, while Germany's
Roland Berger estimates they would need EUR51.8 billion.
Though the exercise didn't identify capital needs of individual
banks, officials said it suggested capital needs would likely be
concentrated among the four institutions already in the hands of
Spain's bailout fund--Bankia SA (BKIA.MC), CatalunyaCaixa SA,
NovaCaixaGalicia SA and Banco de Valencia SA (BVA.MC). They said
that Spain's three largest banks--Banco Santander SA (STD), Banco
Bilbao Vizcaya Argentaria SA (BBVA) and CaixaBank SA
(CABK.MC)--would not likely need to raise new funds.
As part of an effort to draw a line under Spain's deep banking
crisis, the two consultancies have conducted stress tests on the
sector's overall loan book to determine potential losses in
baseline and adverse scenarios through the year 2014. They have
analyzed the sector's ability to absorb those losses and provided
estimates of possible capital shortfalls in both scenarios.
The announcement comes as euro-zone finance ministers gather in
Luxembourg to discuss an up-to EUR100 billion bailout for Spanish
banks, the general terms of which Spain agreed with its euro-zone
partners earlier this month. On his way into the meeting, Spanish
Finance Minister Luis de Guindos said the government will present a
formal request for aid in the coming days.
Finance ministers will also be discussing ways to mitigate the
negative fallout from the Spain's bank bailout, which has
intensified concerns regarding the Spanish government's solvency
and escalated the euro-zone's long-running financial crisis. Hopes
that euro-zone leaders could agree on ways to new ways to support
Spain and the region's other fiscally frail countries have calmed
markets somewhat in recent days.
The Spanish government will use the evaluations by Oliver Wyman
and Roland Berger, together with another already presented by the
International Monetary Fund which found that Spanish banks need an
additional EUR37 billion in capital, to decide how much aid to
request from European Union bailout facilities.
"These estimates show that the figure agreed with the euro group
of EUR100 billion gives us plenty of cushion to help the
restructuring of the national banking industry," Bank of Spain
Deputy Governor Fernando Restoy said at a press conference.
As was the case for other euro-zone countries receiving external
financial assistance, an international panel of experts was
assembled to oversee the evaluations by the two consultancies.
Representatives of the Spanish government, the Bank of Spain, the
European Central Bank, the International Monetary Fund, the
European Banking Authority and the European Commission were
included.
Using data as of Dec. 31, 2011, the consultancies tested Spanish
loan books under a stressed scenario of an 6.5% decline in gross
domestic product and a 26.4% fall in housing prices through the
year 2014. Spanish Deputy Finance Minister Fernando Jimenez Latorre
said it "was the most severe scenario" used in a stress test of
Spanish banks.
To determine the capital needs of individual banks, the
government has commissioned a separate audit being done by Deloitte
Touche Tohmatsu International, PricewaterhouseCoopers, Ernst &
Young LLP and KPMG International.
-Santiago Perez and David Roman contributed to this report
Write to Jonathan.house@dowjones.com