/ Five Spanish entities, between the 8 European suspending the tests. The European banking authority has made public the results of tests of solvency to 90 banks and savings in Europe, 25 of them Spanish. The Bank of Spain believes that the results are as expected. Examined 90 banks equal to 65% of the European banking sector. Five Spanish financial institutions are among the 8 European entities that suspend stress tests. The five Spanish dropout correspond to Banco Pastor, CatalunyCaixa, Caja3, Unnim and the CAM.
The rest of the entities that fail the test are two Greek banks and one Austrian. Thus reveal what resistance tests of 90 banks and savings of Europe – 25 of them Spanish-, which has published this Friday the European banking authority (EBA, by its acronym in English) and showing the behavior of the different entities in a hypothetical adverse or very adverse situation of the economy. In the event of an adverse economic scenario, these banks would not overcome the limit of 5% of the ratio that measures the proportion of own resources of higher quality according to the criteria used in the tests. In total, banks that do not pass solvency tests need an additional 2.5 billion euros capital, although none of Spanish banks will need additional capital contributions because all of them have provisions treasured in the era of bonanza or capital gains by divestments, among other concepts, according to data published by the EBA. Three months for a plan of recapitalization other 16 European banks are at the limit of suspense, with a capital of between 5% and 6%. The most negative scenario includes a contraction in GDP in the eurozone of 0.5 per cent in 2011 and 0.2% in 2012, with rates of unemployment of 10.3% and 10.8% respectively. Banks that have suspended the tests now have three months to present a plan of recapitalization. These plans shall give priority to private sector solutions, but the 27 Finance Ministers committed themselves to go to the rescue of the entities who fail to funds in the markets.
Public subsidies to the banking must respect EU State aid rules, which means that the beneficiary entities must restructure and reduce its size. Examined 90 banks is equivalent to 65% of the European banking sector and in the test has included also to subsidiaries and branches of each group. All Spanish banks exceeded solvency tests conducted in 2010 that measure resilience in extreme crisis situations, to overcome the solvency ratio of 6%. Five Spanish banks suspended. Source of the news: Banco Pastor, CatalunyCaixa, Caja3, Unnim and CAM suspended stress tests