Spain Needs $78B for Financial System to Stay Solvent - Consultants
Tweet Send to a Friend
"The banks in Spain collapse gently under strain." - Unknown
Numbers are in from two consulting firms hired by Spain to evaluate the capital requirements needed for the country's banks to remain solvent. Initial results are a little daunting.
First, firm Oliver Wyman said the Spanish financial system would need between €51 billion and €62 billion (about $78 billion) should the country's GDP shrink by 6.5 percent and house prices fall 60 percent for their peak.
The other firm, Rolan Berger Strategy Consultants, appeared a little more bullish, seeing banks needing just €51.8 billion should such a scenario unfold.
Estimates from the firms call for more assistance than an International Monetary Fund (IMF) audit on June 8th, showing Spain would need €37 billion minimum to sustain the banks. The IMF also said Spain would need a buffer of €60 billion to €80 billion to withstand any further downturn.
Markets shimmied, but didn't shake, following the consulting report. Overall, U.S. markets are much lower on the session with the Dow Jones down 1.4 percent, S&P 500 off 1.6 percent, and Nasdaq down 1.8 percent. The iShares MSCI Spain Index (NYSE: EWP) ETF is down 1.4 percent as well. Banco Santander (NYSE: SAN) and Telefonica (NYSE: TEF) are also both down 1.4 percent.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
Numbers are in from two consulting firms hired by Spain to evaluate the capital requirements needed for the country's banks to remain solvent. Initial results are a little daunting.
First, firm Oliver Wyman said the Spanish financial system would need between €51 billion and €62 billion (about $78 billion) should the country's GDP shrink by 6.5 percent and house prices fall 60 percent for their peak.
The other firm, Rolan Berger Strategy Consultants, appeared a little more bullish, seeing banks needing just €51.8 billion should such a scenario unfold.
Estimates from the firms call for more assistance than an International Monetary Fund (IMF) audit on June 8th, showing Spain would need €37 billion minimum to sustain the banks. The IMF also said Spain would need a buffer of €60 billion to €80 billion to withstand any further downturn.
Markets shimmied, but didn't shake, following the consulting report. Overall, U.S. markets are much lower on the session with the Dow Jones down 1.4 percent, S&P 500 off 1.6 percent, and Nasdaq down 1.8 percent. The iShares MSCI Spain Index (NYSE: EWP) ETF is down 1.4 percent as well. Banco Santander (NYSE: SAN) and Telefonica (NYSE: TEF) are also both down 1.4 percent.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- Bernanke Warns Against 'Premature Tightening'
- Dry Bulkers on Watch as Diana Shipping (DSX) Swings to Q1 Loss (DRYS) (FREE)
- Investors Brace for Epic Herbalife (HLF) Short Squeeze
Create E-mail Alert Related Categories
Forex, Insiders' Blog, Market CheckRelated Entities
Standard & Poor's
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
