Spain´s Stress Test results show transparency

27.07.2010 By: Transfer Consultancy based on Businessweek

The European Union stress tests on banks vindicated Spain’s push to have the results published. Finance Minister Elena Salgado said that the stress tests were published to show transparency. About 95 percent of Spain’s lenders were tested, compared with 60 percent for Europe as a whole, Salgado said. “If we had done only 60, all of our savings banks would have passed,” she said.

Four Spanish savings-bank groups and a bank seized by regulators failed EU stress tests for a combined capital shortfall of 1.84 billion euros ($2.4 billion). All eight Spanish commercial banks tested passed the examination.

Spain wanted the results published to combat a public perception that “our savings banks were in a worse situation than they really are,” Salgado said. “We think the transparency benefits us.”

The five Spanish banks that failed, out of 27 tested, were regional savings banks, which racked up heavy losses following the collapse of the Spanish property market. Following publication of the stress test results, the central bank said in a statement: "The exercise confirms that the Spanish banking system is sound, and in turn substantiates the savings bank restructuring and recapitalisation process pursued over the past twelve months by the Bank of Spain."

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