Photo: Berto Garcia on Flickr
Two major Spanish banks announced today that they would only pass the stress tests currently being conducted by the European Banking Authority if the tests designated provisions for bad loans as core capital.The tests — to be released tomorrow at 1600 GMT — imposed stricter rules than they did last year, eliminating these provisions from tier 1 capital. Both Banco Pastor and CatalunyaCaixa released statements today saying that they would pass the tests without any assistance, but only if this old rule applied.
In an interview with German newspaper Suddeutsche Zeitung on Tuesday, Spanish finance minister Elena Salgado criticised the new testing method as overly stringent. “In my mind, what doesn’t make sense is that the EBA won’t recognise this safety net as capital, as it did last year.”
In March, the EBA identified 8 banks that needed more funds, after raising capital requirements to some of the highest in the world.
Spanish newspaper El Mundo predicted that at least five of Spain’s major banks would fail the tests: Banco Pastor, CatalunyaCaixa, Caja de Ahorro de Mediterraneo, Unnim, and Espana-Duero. It added that other banks might also end up