Spanish banks are safe insists Bank of Spain

The Bank of Spain has insisted that no Spanish bank or building society needs more capital under the new law designed to reform the financial system.

However doubts have been cast over this assertion in an article published today in the Financial Times in which it says that 16 European banks – seven of which are Spanish – only just got through the so called ‘stress tests’ last July and are in need of more capital.

Alarm bells started ringing yesterday when the European Comissioner for the Internal Market, Michel Barnier, could not rule out possibility of some banks requiring help from the state. The seven Spanish banks in question are the Banco Popular, Bankinter, Bankia, Banca Cívica, NovacaixaGalicia, Banco Sabadell and Caixa Ontinyent.

In a statement to the press the Bank of Spain has said that ‘no Spanish entity needs additional capital’ in order to fulfill the requirement of 5% principal capital demanded by the European banking authorities.

The Bank of Spain also said that the seven Spanish banks which had capital between 5% and 7% had more than 6.5% capital.

The Bank of Spain also said that under the law passed last February on the reform of the financial system all Spanish banks must have levels of capital over 8% and building societies at least 10%. In separate statements the seven Spanish banks in question have also strenuously denied that they need more capital.