Spain savings banks have 90 bn euros in bad property assets
Spain's regional savings banks have around 90 billion euros ($124 billion) in problematic property assets, according to a calculation carried out Tuesday by AFP based on central bank data.
The Bank of Spain asked all 17 regional savings banks, which account for about half of all lending, to supply it with details of their exposure to the collapsed real estate market.
The 15 which have so far replied to this request hold a total of 164.9 billion euros in real estate loans or assets.
Of this total 29.4 billion euros are non-performing loans, 27.5 billion euros are "substandard" loans at risk of default and 33.1 billon euros are related to real estate assets the banks have in their hands mostly from seizures which they can not sell.
Caixa Ontivent and Caixa Pollensa are the two savings banks which have yet to detail their exposure the real estate sector.
A Bank of Spain spokeswoman said all savings banks must outline their exposure before or during the presentation of their 2010 results.
The savings banks are at the heart of market fears that Spain could need a bailout like the ones granted Ireland and Greece last year.
To allay these concerns the Spanish government is racing to strengthen the savings banks, which account for about half of all lending.
Last week it announced new rules on the level of rock-solid core capital -- equity capital and retained earnings -- that the 17 savings banks must have on their balance sheets.
Spanish lenders will have to have a core capital level equal to 8.0 percent of total assets by September if they are listed, and a level equal to 9.0-to-10.0 percent of assets if they are not listed.
It estimates the cost of recapitalising the savings banks at 20 billion euros. The market consensus is about twice that amount, and some analysts say the price tag could even be 100 billion euros or more.
The government has threatened to take temporary stakes in those savings banks that do not meet the new requirements by the September deadline.
The government's new core capital requirements are even stricter than the 7.0 percent required under tough new, international "Basel III" rules agreed last year.
© 2011 AFP