This article originally appeared at elEconomista.es, an online Spanish business news website. Click here for the original version of this article, in Spanish.Jose Viñals, Director of the IMF’s Monetary and Capital Markets Department, said there was “no doubt there´s still a lot to do about the cajas,” and the sooner the reforms are implemented, the faster the market would regain confidence in Spain, following a press conference where he presented the latest edition of the Global Financial Stability Report (GFSR) in Washington Wednesday.
Viñals pointed out that the process of restructuring — except for the case of the Caja de Ahorros del Merditerráneo (CAM) — “is well under way and there is a clear strategy.” He said that however, in the case of the CAM, the troubled caja no other bank wants to buy, “if they cannot get those resources from other private investors in the market or from some other merging process there is always the possibility to go to the FROB” (The Spanish government fund to help troubled banks in the country).
“This is not a surprise,” he added.
The GFSR said that Banks in Austria, the United Kingdom, and the United States have high loan losses, but are aided by relative profitability. German banks, conversely, have low revenues and this has fed through into low capital levels for Landesbanken and cooperative banks.
“These low levels of capital make some German banks, as well as weak Italian, Portuguese, and Spanish savings banks, vulnerable to further shocks,” the document said.
About the banking system in Spain, the IMF recognises that “fundamental consolidation of the banking system is under way, with capital standards being raised and most of the savings banks likely to spin off their banking operations into commercial banking arms and to seek private equity through initial public offerings (IPOs),” the report said. But it stressed that “these measures need to be implemented fully to ensure that banking systems emerge stronger.”
Viñals also mentioned the stress tests for the banking sector in Europe. He asked “not to anticipate the results and hope that the these will be sufficiently credible, ambitious and adequate to follow up strategies in order to recapitalized, restructure or resolve those banks that need to be going along this route.”
Regarding a possible contagion to Spain, Viñals assured that “the actions that have been taken in Spain recently have managed to decouple in the view of markets the fortunes of Spain relative to those of Portugal.”