--Capital shortfall estimates in line with expectations
--Uncertainty over terms could still spook investors
--Spain's three largest banks may not need more capital
MADRID--Spanish banking shares rose Friday morning after two
independent consulting groups put the banks' capital needs at up to
EUR62 billion--in line with expectations and lower than the EUR100
billion European Union officials agreed to make available to help
Spanish lenders.
Analysts, however, warned that uncertainty over how much each
bank will need to raise and the terms of bailout will remain and
could continue to spook investors over the next weeks.
"We maintain our view that almost all the domestic Spanish banks
will ultimately need to strengthen capital," Nomura analyst Daragh
Quinn said.
"In the meantime, with continued significant macro and political
uncertainty, we remain negative on Spanish banks," he added.
Late Thursday, Spanish officials presented the results of stress
tests by Oliver Wyman, a U.S.-based consulting group, which
estimated that under an adverse economic scenario, Spanish banks
would need between EUR51 billion and EUR62 billion through 2014,
and by German consultancy Roland Berger, which estimated they would
need EUR51.8 billion.
Morgan Stanley called the tests "about credible," saying
loan-loss assumptions for the next three years seemed relatively
harsh, although profit expectations were somewhat generous.
Although the evaluations didn't break down the capital needs of
each bank, Spanish officials and analysts said Spain's three
largest banks--Banco Santander SA (SAN, SAN.MC), Banco Bilbao
Vizcaya Argentaria SA (BBVA, BBVA.MC) and CaixaBank SA (CAIXY,
CABK.MC)--likely won't need to raise new funds.
Funding should instead be concentrated on the four smaller
lenders Bankia SA (BKIA.MC), CatalunyaCaixa SA, NovaCaixaGalicia SA
and Banco de Valencia SA (BVA.MC).
At 0750 GMT, BBVA and Santander shares were up 0.8%. CaixaBank
was up 2.5%, while Bankia, which the government has taken over last
month, was up 6%. The stock is down more than 70% since the
beginning of the year.
Doubts over the terms of the EUR100 billion funding
international creditors will provide to Spain to bailout its banks,
however, remain.
Euro-zone finance ministers gathering in Luxembourg Thursday and
Friday were expected to discuss those terms, including the interest
rate to be charged for the loan.
Another issue under discussion is whether to change the
senior-creditor status claimed by EU bailout funds in order to ease
the fears of private investors that they will be forced to bear a
larger share of losses. Such fears have intensified the financial
crises of countries receiving bailout funds.
Spanish Finance Minister Luis de Guindos said the government
will present a formal aid request in the coming days. Euro-zone
officials, who have asked Spain to speed up the request, said they
expected it Monday.
-Write to Patricia Kowsmann at
patricia.kowsmann@dowjones.com