Spanish banks’ recapitalization needs are well within the amount of money earmarked for that purpose by euro zone countries, which will allow the process to go on smoothly, the chairman of euro zone finance ministers Jean-Claude Juncker said.
Spain announced on Friday that according to an independent audit of the country’s 14 main banks by consultancy Oliver Wyman its banks would need 59.3 billion euros ($76.3 billion) in extra capital to ride out a serious economic downturn.
The worst-case estimate, which does not take into account tax credits or future bank plans to raise their own capital, is based on a scenario of a 6.5 percent contraction in Spain’s economy between 2012 and 2014.
The audit said half of the 14 banks need more capital, with a 49 billion euro shortfall for banks that have already been nationalized.
“I am comforted by the fact that the total capital shortfall of the Spanish banking sector comes out at slightly less than 60 billion euros,” Juncker said in a statement.
“The final State aid provided to Spanish banks will be lower than the reported capital shortfall, given measures to be taken by the banks in accordance to their recapitalization and restructuring plans,” he said.
Euro zone countries agreed in July to offer Spain up to 100 billion euros in a loan specifically for the recapitalization of the banking sector, hit by the collapse of the real-estate market.
“The assessment shows that the total financial assistance agreed in July should be more than adequate to cover the final capital needs, including a comfortable safety margin,” Juncker said.
“It should ensure that the recapitalization process of banks can proceed efficiently and in accordance with previously agreed timelines,” he said.