Moody’s says Spain’s banks need more

MADRID - Agence France-Presse

A planned recapitalization of struggling Spanish banks will help shore up confidence, but the amount in rescue funds sought by Madrid is not enough to keep the banks stable in stress situations, Moody’s said yesterday.

“Recapitalization will materially enhance the solvency of affected institutions and help restore market confidence in Spain’s banking system as a whole,” said the ratings agency.

“However, the recapitalization amounts published by Spain are below what we estimate are needed for Spanish banks to maintain stability in our adverse and highly adverse scenarios,” added Moody’s.

The agency believes that the banks would require between 70 and 105 billion euros ($90-$135 billion).
However, an audit carried out by US financial consultancy Oliver Wyman said Friday that Spanish banks need 59.3 billion euros to fix their balance sheets, which have been severely weakened by a property market crash in 2008.