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AN INDEPENDENT AUDIT of the strength of Spain’s banking sector has found that seven banks will need a collective bailout of almost €60 billion in order to cope with possible defaults from the country’s property crash.
An official report published by Spain’s central bank this evening said that as of last December, seven of the country’s 14 major banks would need €59.3 billion in extra recapitalisation in order to survive any wave of mortgage difficulties.
The funding needs fall to about €53.75 billion when the figure is adjusted for bank restructuring that has already begun, and the tax effects are considered. That figure billion is a ‘worst case scenario’ figure, with the audit finding finding that the banks would need €25.9 billion in a ‘baseline’ scenario.
The seven banks which will require funding account for about 38 per cent of the entire Spanish banking market. Bankia, the bank in the worst state, would need €24.7 billion in the ‘worst case scenario’ projection, carried out by Oliver Wyman.
“It is important to point out that the capital needs identified in the exercise do not represent the final figure of State aid to banks,” the Central Bank said in a statement this evening.
“This aid may be significantly less, as it will be determined once the measures envisaged in the recapitalisation plans to be submitted by banks to the Banco de España
in October are taken into account,” it said.
The European Banking Authority welcomed the results, saying they were “a major step towards strengthening and restoring the soundness of the Spanish banking system”.
It added that restoring health to the Spanish system was “ultimately crucial for a sustained recovery of economic growth”.
The publication of the results had been keenly awaited around Europe, as the price of repairing the banks was seen as a key measure of whether Spain would be able to foot the bill itself, or whether it would require European bailout funds to do so.
Ireland is to contribute just under 1.6 per cent of any cash accessed from the European Stability Mechanism – meaning if Spain was to ask for a European bailout of €53.75 billion, Ireland would be asked to contribute about €856 million.
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How ridiculous is it that a country in a bailout has to contribute to another country’s bailout…..
Creative accounting..it got us to where we are today….999.99% phukkt.
Here we go again.
BIZARRE, beyond words.
Yeah but it’s not a problem this time, sure didn’t we vote yes for stability, yes for jobs, and yes for a filthy corrupt, incapable government! So Theres no need to worry
Rothschilds loving this. Another country they now own without firing a single bullet. Who controls the debt, controls everything.
How long before Iceland are accused of having WMDs?? Wilful Means to Democracy.
At least they have the weather
They’ll probably find a way of taxing them on it.
Sunshine levy.
And after all the denying the Spanish government did over the last few months, now it looks like they need a bailout, this story sounds awfully familiar doesn’t it.
Most outside sources believe that it will be at least 150 bn. The bailouts here have been around 65bn, Spain is 7-8 times the states size, has 25% unemployment, and a million empty houses.
With the Germans, Finnish and Dutch reversal recently on bailouts, it is hard to see how Spain can return to growth if it remains in the Euro. Hard to see it survive in its current form as well if it remains. Catalonia and the Basque region will do quiet nicely, outside of Madrid. Catalonia itself has an economy and populace similar to Austria.
but hey, what do the no’s matter. Roll out the EU commission and give some more reassurances and another band aid.
Another thing. AIB and Lehman’s Bros. both would have passed the Spanish tests according to economists (Con Gurdiev and F. Goria)
A country that is being torn apart. http://www.guardian.co.uk/world/2012/sep/28/spain-cultural-fabric-tears-austerity-cuts
but the Euro dream must live on, no matter the cost to society and economies.
I hope they go back to the old money, that way I put a big bag of 2p’s to good use.
Something has got to give eventually, I hate to say it but could there be some physical conflict in the near future. People will only take so much
And our central bank said the other day that we will be facing at least another 8 severe budgets before we can get to a manageble defecit. And thats on the guarantee that the global economy will improve. But if nearly everyone is suffering from a massive defecit, surely growth forecasts are out the window. Its a death spiral, too much debt in the world. A massive write off is needed or there is going to be serious trouble ahead. If u go by the story of the stockbrokers in the WTC on the day it collapsed still buying and selling to the moment the towers fell i think we need a new direction in trying to fix this. Einstein said u can’t solve a problem with the same consciousness that created it.
The problem with debt was the invention of charging interest. there now is more debt in the world than there is money to pay it off. Islam religion actually bans the charging of interest on loans. They may have a point there.
And how is the standard of living in the middle east? I will stick to our way, thank you very much.
We just need to have laws like the state of Texas – they need to have 20% of the cost of a house in order to get a mortgage. They haven’t had the same issues that the rest of the USA and Europe have had in relation to sub-prime mortgages.
Better still John..insist they have 20% of the mortgage up front before they get born.
Less with the wimpish Texan pussyfooting.
@mike , read up on how the Islamic banks get over that issue of interest and you will change your mind.Come back to me if you can’t find it.
How long before an ex Goldman Sachs employee takes over the running of Spain ?
Just sit back and wait for Italy to peep its head in the door,form an orderly queue please…
Its funny ive,been seeing this pattern unfolding murmers in the markets,3 years ago GREECE,2 Years SPAIN,and 1 year ago ITALY….its always the same,,Finance ministers announcing ,oh we wont need a bailout ..
Just remember our governments response at the beginning of our banking crisis..and youll see the pattern…
Have we all got collective amnesia or something…?
Really shows up what our banks were at doesn’t it – considering their population is 10 times that of ours, the sums seem to be pretty much the same.
The last 3 lines would make a one believe that the only way we can get 856 million is by SCALPEL PLEASE.The burden of paying Banking Bailout Debt is destroying our country and economy and now we have to pay into a fund that by time we can access it it will be empty due to the bailing out of larger countries Banks.When called upon dont we have to find the 856million in a week or 2 weeks due to the conditions of Fiscal Compact Treaty if we do not have it by then we will be penalised on top of still having to pay the 856million to the ESM.Is this the case in front of the Irish people not the Government but the people ?
IF this is the case then Pearse Doherty’s latest interview on the George Hook show makes absolute sense .The county is BROKE we cant pay and for anyone one bashing him he’s the only man talking sense in my view my kids are not going to be slaves for nutjob bankers no way no way.
that was what you all voted “yes” for , now you will pay the price and you only have yourselves to blame.
Should countries like Ireland be exempt from contributing as we are already at the mercy of the Troika and the bailout terms?
To the best of my knowledge,we don’t contribute till we come out of the so called “bailout”.But open to correction.
Your corrected. We borrow to pay into the ESM.
@Norman – Kerry is correct. Under the EFSF arrangements, bailed-out countries would not contribute, but the ESM does not make such arrangements, So while Ireland didn’t contribute to the second Greek or Portuguese bailouts, under the terms of the ESM we’re obliged to contribute equally to any bailout irrespective of our own funding status.
Well done all who voted yes to the ESM. Please post here and say why you voted yes.
It’s crazy to think that if the Spanish bank bailout was to equate to the Irish bank bailout in GDP it would cost Spain more than 400billion … Shows the scale of banking debt on Ireland
Crazy. Time for radical action.
I’m sure that the Spanish government won’t be as silly as our crowd were!
How can the Irish contribute to a Spanish bail out when’we are broke’?IRELAND IS FAR FOM BROKE.Charity should begin here at home.
Start to restore decent wages for all first.Here,in Ireland for a start.
Bailing out Spanish BANKS whith the spanish taxpayer’s money:Europe is a disgrace.
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