Spain Says Sticking to Timetable for Bank Audit by End-July

 

Spain’s government said it is sticking to its plan to publish an audit of banks’ balance sheets in July, denying it would postpone the report by 2 months.

The government is keeping the initial deadline of July 31 for the publication of reports by four auditors, said an Economy Ministry official, who asked not to be named in line with government policy. Officials at the ministry in Madrid had declined to comment earlier on reports by Expansion newspaper and Bloomberg News that the audits would be delayed until September.

Officials decided to give PricewaterhouseCoopers LLP, Deloitte LLP, Ernst & Young LLP and KPMG Europe LLP more time to carry out their assessment of the balance sheets of Spain’s 14 main banking groups, a person familiar with the plans said today. The results of a separate stress test by Oliver Wyman Ltd. and Roland Berger Strategy Consultants are due by June 21.

Spanish bank losses are climbing as a second recession in three years pushes up unemployment. Officials will use the results of the stress test to gauge how much of the €100 billion rescue package agreed with the EU on June 9 they will need to deploy.

Bad loans as a proportion of total lending jumped to 8.72% in April, the highest since 1994, from 8.37% in March and 6.36% a year ago as €4.8 billion of credit soured in the month, the Bank of Spain said yesterday.