All Major Spanish Banks Pass EU Stress TestsMajor
July 23rd, 2010
Early results from the EU stress tests on the financial systems of European member states, indicate that all primary Spanish banks have passed the test and that the banks now have enough capital reserve to overcome a situation that would affect their profits, for example if the current economic issues were to worsen.
The Prime Minister, José Luis Rodríguez Zapatero, has stated that the Spanish banks made an extra effort to provide information above and beyond that of all other countries, which he referred to as the “Spanish housing credit portfolio.” The Government wanted the Spanish financial entities to make “an additional effort for transparency” in the tests, the full results of which will be announced later today.
The tests have been carried out by national inspectors, in Spain’s case being the Bank of Spain, along with the Committee of European Banking Supervisors (CEBS). The CEBS CEBS) gives advice to the European Commission on policy and regulatory issues related to banking supervision, promoting cooperation and convergence of supervisory practice across the European Union.
The Top 91 European banks have been subjected to the same testing, and the results are highly anticipated by investors and financial markets around the world to reduce the uncertainty about bring some confidence to the stability of national and international financial systems.
The positive results will be more than welcomed by the Spanish government; Zapatero explained that Spain self-imposed the maximum release of information, well above what the European authorities had agreed, because his government did not want any doubt about the transparency and soundness of the Spanish financial system.
The Prime Minister added that Spain has undergone review by choice for 95% of its financial system, including all commercial banks and savings banks, with the exception of rural banks and credit unions, while other countries have only put forward data for 50% of their financial systems.
Five regional savings banks were found to fail the tests but were already known to have had weak capital levels beforehand and were recently involved in consolidation that was encouraged by the Spanish government and the Bank of Spain to help strengthen their cash reserves.
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