–With Core Capital Of 10% Banks Would Need E90-E100 In Pessimistic Case
FRANKFURT (MNI) – U.S. rating agency Fitch on Friday criticized the
findings of consultants Oliver Wyman and Roland Berger regarding the
Spanish banking sector, saying that their adverse scenario is based on a
core tier one capital ratio that is too low.
“The assessment by independent consultants that Spanish banks will
need a E51-E62 billion capital injection in an adverse scenario is based
on a 6% core tier-one capital ratio as being sufficient for banks to
regain market confidence,” Fitch said in a statement. “We think the
market is unlikely to resume large-scale lending to banks after such
widespread losses unless capital levels are more in line with European
Banking Authority standards.”
According to Fitch, a core tier-one capital ratio of 10%
“adequately captures the risk profile of the Spanish institutions,
provides more comfort and addresses declining confidence in the sector.”
To maintain the higher ratio, Fitch estimated that the capital
needs in an adverse scenario would thus need be between E90 to E100
billion. In a less pessimistic baseline scenario, still using a 10% core
tier one ratio, Fitch estimates the Spanish banking sector would need
between E50 and E60 billion, compared to Wyman and Berger’s E16 to E26
billion range.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com
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