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FISCAL COSTS OF BANK RESTRUCTURING

Fitch initiated a review in May of its previous assessment that the recapitalisation of Spanish banks would incur a fiscal cost of around EUR30bn (3% of GDP). On 25 May, it was announced that Bankia/BFA faces a EUR19bn capital shortfall. Fitch now expects the fiscal cost of bank restructuring and recapitalisation to be in the range of EUR50bn to EUR60bn and in a negative stress scenario, the cost could rise to EUR90bn- EUR100bn. A detailed description of Fitch's analysis of the potential capital requirements of the Spanish banking system is set out in an accompanying comment, "Fitch: New Base Case Indicates Spanish Banks Need EUR50bn to EUR60bn Capital".

Last modified: 2012-06-07 12:59:55 by argos