# Spanish banks fail stress tests



## Trubrit (Nov 24, 2010)

An interesting snippet from Sky News Online today:


The tests, which have been applied to Europe's 91 biggest banks, are designed to win back the confidence of investors and markets from which they borrow.

The four UK banks subjected to the tests - Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland - were shown to have passed the threshold of having reserves worth more than 5% of the value of their liabilities.

Five of the failing banks are in Spain where the solvency of local savings banks, known as Cajas, have been in doubt throughout the financial crisis.

Two banks failed in Greece, where the bailed-out economy remains in recession as it struggles to escape from a mountain of debt.

One Austrian bank failed the test while a German bank withdrew from the process when it learned that it would also fail.


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## Alcalaina (Aug 6, 2010)

And RBS just scraped through.

Just heard someone saying on the radio that the stress tests weren't stressful enough, they didn't factor in a scenario of, for example, Greece or Ireland being unable to pay back their debts. 

The Irish banks all passed the last lot of stress tests - and went bust four months later.


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## Happyexpat (Apr 4, 2011)

Actually that is a really key point. A number of financial institutions have now factored in the Greece and Italy scenario and it would appear that at least 4 UK banks would fail the tests.
It just shows you how much of a load of b}%%}ks it all is as one of the UK banks would fail because it has a heavy commitment to a French bank which is way over committed to a Greek bank. Globalisation has a lot to answer for!
Anyway, as usual, we the common people already knew the Caja's were in trouble due to their involvement in property speculation out here. Just wait until they reveal the current value of their property holding as per the EEC ruling! Having said that, for some reason, the Hacienda has been instructed to use property valuations from a few years ago so maybe there is yet another 'fudge' going on......


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## Alcalaina (Aug 6, 2010)

The Spanish cajas have been given a deadline by the government to recapitalise themselves and a lot of them are merging or closing. There is government funding of €15 billion to help them. Some have merged to form a new bank called Bankia which has just been floated on the stock exchange. 


> To date, 38 of the 45 cajas – equivalent to over 90 percent of the sector – have initiated or concluded mergers reducing the number of operators down to 17. The majority of these mergers have requested partial funding from the €15bn FROB, the Fund for Orderly Bank Restructuring, or deposit guarantee scheme. For the first time in 16 years the Bank of Spain has also had to rescue a financial institution - CajaSur.
> 
> Spanish cajas restructuring as capital adequacy rules increase


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## Pesky Wesky (May 10, 2009)

Alcalaina said:


> The Spanish cajas have been given a deadline by the government to recapitalise themselves and a lot of them are merging or closing. There is government funding of €15 billion to help them. Some have merged to form a new bank called Bankia which has just been floated on the stock exchange.


But Bankia's been going for a few months now, it's not new as in a result from this stress test.


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## Alcalaina (Aug 6, 2010)

Pesky Wesky said:


> But Bankia's been going for a few months now, it's not new as in a result from this stress test.


Its shares were launched last week. It isn't new as a result of this latest stress test, but was formed as a result of a shake-out of under-capitalised cajas revealed in previous stress tests.


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## pladecalvo (Aug 11, 2010)

...but the shortfall of the failed banks is €2.5bln which in banking terms is ....about a fiver!


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## thehenderson (Jul 16, 2011)

I wouldn't mind that fiver!


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## VFR (Dec 23, 2009)

Trubrit said:


> An interesting snippet from Sky News Online today:
> 
> 
> The tests, which have been applied to Europe's 91 biggest banks, are designed to win back the confidence of investors and markets from which they borrow.
> ...



Hard to believe (what I highlighted above) that they are considered a good bet even though they could only meet a fraction of their liability's ?


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## littleredrooster (Aug 3, 2008)

playamonte said:


> Hard to believe (what I highlighted above) that they are considered a good bet even though they could only meet a fraction of their liability's ?



I believe RBS was considered borderline and only just scraped through.


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## Happyexpat (Apr 4, 2011)

Or, as usual, a bit of creative accounting took place....


littleredrooster said:


> I believe RBS was considered borderline and only just scraped through.


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## Barry Davys (Aug 2, 2008)

Here is some food for thought. The stress test results are not the most important financial event! The assumptions used in the test and the disclosure of sovereign debt are more important. It is the Sovereign debt issue which is the most important issue of all.

Which brings us on to "contagion" from Greece. If Greece defaults (and at the time of writing it is still IF), yes there will be an effect in other countries because banks from other countries have lent the Greek Government money. If Greece defaults, they will not get back all their money, giving them a loss. However, the fact that Italy, Spain, UK and USA have their own very large deficits was not caused by Greece, these countries made their deficits all on their own.


This in turn brings us to the main point. If you want to really see what is happening you have to step back from some of the day to day headlines and the political gesturing and look at the bigger financial picture. From this perspective it looks like a canvas Picasso would have been proud of!!


But what about the impact in Spain? There is a very real possibility of a change to the make up of the Euro. If this happens Spain will be in the part of the Euro that devalues. This will mean that money brought into Spain will go a lot further (remember the 1GBP = 1.5 euros), the cost of living will fall, Spain will be more competitive and the sun will shine again.


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## Sonrisa (Sep 2, 2010)

Barry Davys said:


> Here is some food for thought. T
> 
> 
> But what about the impact in Spain? There is a very real possibility of a change to the make up of the Euro. If this happens Spain will be in the part of the Euro that devalues. This will mean that money brought into Spain will go a lot further (remember the 1GBP = 1.5 euros), the cost of living will fall, Spain will be more competitive and the sun will shine again.


I hope that's right. They have been contemplating the two tier euro for quite some time. 
It has become clear that one size does not fit all.


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## andmac (Nov 9, 2010)

Barry Davys said:


> Here is some food for thought. The stress test results are not the most important financial event! The assumptions used in the test and the disclosure of sovereign debt are more important. It is the Sovereign debt issue which is the most important issue of all.
> 
> Which brings us on to "contagion" from Greece. If Greece defaults (and at the time of writing it is still IF), yes there will be an effect in other countries because banks from other countries have lent the Greek Government money. If Greece defaults, they will not get back all their money, giving them a loss. However, the fact that Italy, Spain, UK and USA have their own very large deficits was not caused by Greece, these countries made their deficits all on their own.
> 
> ...


I do think that the markets and speculators are pointing at a two tier Euro:

A modest proposal for eurozone break-up - Telegraph


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## Happyexpat (Apr 4, 2011)

Some of the shops have already been operating a multi tier system for ages. If you go into Corte Inglis many of their price tickets are long strips with different prices for each country in the Eurozone. Personally, as I have said before, I think it is probably the only sensible and practical solution or devalue the Euro as a whole which won't be allowed to happen.
As a pensioner getting money from the UK I would selfishly be delighted!


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## andmac (Nov 9, 2010)

I am quite selfish in this too. When we sold up in the UK we kept the money over there. Waiting for the exchange rate to improve. We rent here and will do so until things improve.

I know that the tables are reversed for many here........


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## xabiaxica (Jun 23, 2009)

most of our income is from the US - so OH not too happy atm

dd1 is theough......she has a euro pocket/babysitting income & her dad brings things back from the US for her!!


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