IMF says Spanish banks could need €40 Billions

[John Starks]

FXstreet.com (San Francisco) - According to the International Monetary Fund, the banking system in Spain could need as much as €40 billions to solve its problems, but it would be €25 billion in scenario base, €29 billion in Banco de España's scenario and €37 billion in adverse situation.

"several banks would need to increase capital buffers by about EUR 40 billion in aggregate to comply with the Basel III transition schedule," says the official statement.

"The Spanish authorities have recently accelerated financial sector reforms to reduce vulnerabilities in the system. They have taken measures to address some of the most problematic banks and are currently undertaking an independent valuation of all portfolios, which is a welcome step and should help to determine further restructuring needs," Ceyla Pazarbasioglu, Deputy Director of the IMF’s Monetary and Capital Markets Department of and head of the team that conducted the FSAP, said.

"But the extent and persistence of the economic deterioration may imply further bank losses. Full implementation of reforms, as well as establishing a credible public backstop, are critical for preserving financial stability going forward," Pazarbasioglu concluded.

"The report was scheduled to be released on Monday but the IMF has published it Friday late in New York but early in the morning in Spain and the whole eurozone," comments in his twitter account Mauricio Carrillo (@MCarrilloFX), analyst at FXstreet.com. "Market could assume that the IMF hurries are in line with the speculations on Spanish Bailout as soon as this weekend."