Larger Spanish Banks Healthy in 2010
October 9th, 2009
Spain does not see any need to buy assets from banks in 2010, Economy Minister Elena Salgado said on Tuesday.
‘…in 2010 it will not be necessary to acquire financial assets. The government spent 30 billion euros on this in 2009 but this will not have to continue in 2010,’ Salgado said while presenting Spain’s draft 2010 budget to parliament.
However, analysts pointed out that the lack of need for government financing is more due to an improvement in credit markets than to any greater solidity of the Spanish system.
‘This does not mean that institutions will not need to improve their capital ratios, but that they will be able to do this by tapping the markets for cash,’ Spanish brokerage Renta 4′s Nuria Alvarez said.
The head of the Economy Ministry’s Treasury Department, Soledad Nunes supported this view by saying on Tuesday that a group of small and medium-sized Spanish banks could face capital shortages in the next few months.
Nevertheless the government thinks it will be unnecessary in 2010 to tap the 99 billion euro emergency fund it created in June to buy up bad debt from the banking sector and spur mergers between the country’s smaller banks.
Spain’s tightly regulated banks emerged largely unscathed from the first phase of the global crisis that sparked bailouts across northern Europe and the United States.
Persistent credit problems, however, led Spain to buy assets from bank’s struggling with their credit ratios and to push for mergers among the highly fragmented regional Spanish savings bank sector – largely due to the Spanish property crunch.
Story from Forbes
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