- Business
- Childbirth & Education
- Legal Formalities
- Motoring
- Other
- Pensions & Benefits
- Property & Accommodation
- Taxes
- Airports and Airlines Spain
- Paramount Theme Park Murcia Spain
- Corvera International Airport Murcia Spain
- Join us for Tea on the Terrace
- When Expat Eyes Are Smiling
- Meet Wincham at The Homes, Gardens & Lifestyle Show, Calpe
- QROPS 2014
- Spain Increases IHT in Valencia & Murcia
- Removals to Spain v Exports from Spain
- The Charm of Seville
- Gibraltar Relations
- Retiro Park : Madrid
- Community Insurance in Spain
- Calendar Girls
- Considerations when Insuring your Boat in Spain
- QROPS – HMRC Introduces changes that create havoc in the market place
- QROPS – All Change From April 2012
- Liva & Laia : 15th November
The six Spanish banks included in the 2016 EU-wide stress tests conducted by the European Banking Authority (EBA) will easily pass the examination, financial sources have revealed.
Although the results will not be officially released before Friday, these sources confirmed that Santander, BBVA, BFA-Bankia, CaixaBank, Sabadell and Popular will get good grades in an evaluation aimed at comparing and assessing the resilience of EU banks to economic shocks.
Smaller lenders
Other significant Spanish lenders not covered by the EBA test – Kutxabank, Unicaja, Ibercaja, BMN, Liberbank, Cajamar and Abanca – will undergo their own examination by the ECB. The methodology will be similar, although the test will take into account their smaller size and complexity.
In an adverse economic scenario, BFA-Bankia will have the best Common Equity Tier 1 ratio (of close to 10%), CaixaBank, BBVA, Sabadell and Santander will be in the region of 8% to 9%, and Popular will be close to 7%, although this figure does not take into account a June capital increase, which could raise its final rate to 10%.
The hurdle rate in an adverse scenario is set at 5.5%, although there is no official failing figure.
AThis is the latest in a series of stress tests conducted on the banking sector in 2011, 2012, 2014 and 2015, which will not be remembered for their ability to detect troubled lenders.
This time around, the test includes 51 of the EU’s largest banks, representing 70% of the sector. Following their latest capital reinforcement, a point that regulators have insisted on, Spain’s six largest banks will pass the test. But this requirement to shore up their equity has created another problem: low profitability, which is driving investors away.
Unlike other stress tests, this one is being conducted by the EBA, which is headquartered in London, rather than by the European Central Bank (ECB).
The EBA has launched an improved internal control process to prevent another huge mistake like the one it committed in November 2015, when it erroneously placed Spanish banks’ equity levels in last place. After correcting the mistake, Spain ended up ahead of Portugal and at the same level as Ireland.
Recommended Reading :