||Your Daily Spain Update. SAVED or not SAVED?; entered at 2012-06-22 11:41:49 |
Friday, June 22, 2012
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.