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Spain rating needs credible bank recapitalisation plan

Source: Reuters - Fri 21st Jan 2011

A cost in the region of 50 to 60 billion euros to recapitalise Spanish banks, if part of a credible plan, would be a positive for the sovereign's credit rating, ratings agency Fitch said at a conference on Friday.

"If we get much larger recap costs than we have currently built into our rating, then obviously that would prompt us to have a look at the rating again," said David Riley, global head of sovereign ratings at Fitch Ratings.

"If it's 50-60 billion (euros), and it's credible, and draws a line under the Spanish banking sector and in particular the Spanish caja sector, I think that's basically a net positive."

In July the agency estimated the cost of recapitalising the Spanish banking sector at 23 billion euros, but admitted this estimate was now below the market consensus.