Fitch Thinks $125B Spanish Bank Recap is Enough to Cover Extreme Case

June 11, 2012 10:23 AM EDT
The $125 billion bank recapitalization announced over the weekend is enough to cover the housing market collapse in Spain at the extreme end of Fitch's stress estimates. Last week, analysts at Fitch downgraded Spanish debt, claiming Spanish Banks would need 60 billion Euros in capital.

Spanish banks have suffered huge losses due to collapsing housing prices, and the losses could be as high as 295 billion Euros, according to Fitch. The bank stresses have caused a lot of concern in Europe, with some pointing to a potential breakup of the European Union under a worse case scenario.

Over the weekend, European officials announce they were going to recapitalize the banks in Spain by injecting them with 100 billion Euros ($125 billion), but so far little is known about the details of how the recapitalization would look or where the money would come from.

Markets around the globe are calmer today, as it appears the 100 billion Euros is enough to keep Spain afloat for now.

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