Spain’s banks would need as much as 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 banks would need between 51 billion euros and 62 billion euros should Spanish gross domestic product shrink by a combined 6.5 percent over three years and house prices drop 60 percent from the peak. Roland Berger Strategy Consultants said lenders would need 51.8 billion euros under those conditions. The study didn’t consider potential losses on government bonds. Spain hired the firms last month to estimate capital shortfalls as investors questioned the health of lenders pummeled by a five-year real estate slump. Spanish bank stocks surged today, paced by the nationalized Bankia SA (BKIA), after the European Central Bank was said to relax rules on the collateral lenders can use for funding and Economy Minister Luis de Guindos said there was now a “roadmap” to solve the crisis.
Source: Bloomberg
