SPAIN’S central bank will publish stress tests on its lenders and Germany is coordinating disclosure at EU level, moving Europe’s banking sector closer to putting its financial health on public display.
After media leaks that Madrid was keen on disclosure of stress tests on banks to dispel rumours it is about to seek Greek-style aid, the Bank of Spain said yesterday it would publish them in the near future.
A day ahead of today’s European Union summit likely to focus on regulatory matters, Germany’s finance ministry said it was coordinating the issue with EU partners. Bankers said the two countries might jointly provide the impetus for action Europe-wide.
“If Germany supports Spain in its push, the debate in the EU gets a special dynamic which makes publication more likely,” said one European banking source.
Spain’s banks have largely weathered the financial crisis but the capital of the country’s 45 savings banks has been eroded by exposure to property and construction.
Listed and savings banks have about €400bn (£333bn) in property-related debts on their books.
“The stress tests are to prove that all banks have sufficient capital to cope with economic growth scenarios, which at present seem most reasonable, but also future complicated growth scenarios,” Spanish central bank governor Miguel Angel Fernandez Ordonez said.
Banks in Spain and the rest of the European Union have undergone liquidity tests.
City A.M. Reporter