Warning of shortfall for spain’s banks

Published on 29/09/2012 00:00

AN INDEPENDENT audit of Spain’s troubled banks shows a shortfall of €59.3 billion (£47.3bn) to cover for an
economic downturn.

The stress tests’ findings,
released by consultancy Oliver Wyman yesterday, will help the country decide how much money it will tap from a €100bn European loan facility to prop up its financial sector.

The Bank of Spain’s figure does not include the impact of ongoing banking mergers or taxation. Including those two elements, the shortfall drops to €53.7bn.

The Spanish government on Thursday announced the country’s most severe round of budget cuts yet. The new measures are aimed at convincing international authorities and investors that it is on track to meet its deficit reduction targets.

As concerns mounted that the country will soon seek a bailout, finance minister Cristobal Montoro said the draft budget for 2013 would cut spending by €40bn.

He said cuts for ministries would average 8.9 per cent.