Prime minister Mariano Rajoy is on Friday expected to demand that Spanish banks raise an extra €30bn to guard against toxic debts. But analysts at RBS said this was too small and that the €10bn Madrid injected into Bankia this week was “just the start”. Fears over the crisis sent the euro to its lowest level against the pound since August 2008.
“Spanish banks face a €68bn capital shortfall over the next three years on increasing bad loan provisions and regulatory capital, in our view,” analysts said. “Capital needs could exceed €98bn in a deeper recession scenario.”
They added: “The other Spanish banks will likely need external help to avoid insolvency. We think public funds alone will not be enough to support all Spanish banks.”
Experts have warned that Spain does not have the resources to support its bank and, like Ireland, will have to seek international aid.
Spain’s stockmarket fell to a three-year low on Thursday but then rebounded strongly to finish up 3.5pc. Traders were boosted by strong corporate results from Repsol. BBVA, the Spanish bank, rose 6.6pc as traders bet that the bank crisis will at last be tackled.
The Telegraph
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