Five of the eight banks to fail the European banking stress tests are Spanish

Five of the eight banks to fail the European Stress Tests, the results of which were announced on Friday, are Spanish. They are joined by two Greek banks and an Austrian one. A German bank, Helaba, decided not to publish results because, the Financial Times claims they would have failed.

The Spanish banks to fail to meet the requirements are Banco Pastor and savings banks, CatalunyaCaixa, Unnim, Caja3 and the CAM. The tests show they did not have the minimum 5% of core-capital and conclude that together they need 1.564 billion €.
Another 16 banks had a core capital between 5% and 6%.

The test sets up a hypothetical crisis situation but has been criticised for its definition of ‘core capital 1’. Both Spain and Germany think that generic provisions and silent partners should also have been taken into account.

El País reports that the current debt crisis is already worse than the ‘worst case scenario’ used to establish the parameters of the stress tests. Losses on bonds in Greece, Portgual and Irelarnd are larger than those used in the tests.

Minister for Tax and the Economy, Elena Salgado, said she saw ‘an excellent result’ in the stress test conclusions. She noted that the process ignored the money that the banks put aside for emergencies, including debt convertible into shares.