Spain’s Banks Need Up To $78 Billion, Assessors’ Report Says

By Charles Penty and Ben Sills – Jun 21, 2012

(Bloomberg)

Spain’s banks would need up to 62 billion euros ($78 billion) in capital to withstand a worst-case economic scenario, according to two consulting firms hired by the government to conduct stress tests on the lenders.

Oliver Wyman Ltd. estimated that the financial system would need between 51 billion euros and 62 billion euros should Spanish gross domestic product shrink by 6.5 percent and house prices fall as much as 60 percent from their peak. Roland Berger Strategy Consultants said banks would require 51.8 billion euros in that scenario.

Spain hired the two firms last month to estimate the capital shortfall at the nation’s banks as investors questioned the health of lenders pummeled by a five-year real estate slump. Economy Minister Luis de Guindos has said Spain will use the results of the studies to determine how much money it might need to draw from the 100 billion euros made available byEurope after it requested funding to clean up banks.

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