Spain says 70 pct of its banks will pass IMF stress tests

The majority of Spanish banks, 70 percent, will pass the International Monetary Fund’s stress tests of the country’s lenders, Economy Minister Luis de Guindos said Thursday.

The IMF will on June 11 publish results of its tests of how Spanish lenders — struggling with bad real estate loans following the 2008 collapse of a property bubble — would fare if the economy were to decline further.

“What it will say fundamentally is that 70 percent of Spanish banks are perfectly healthy and that problems are concentrated in the remaining 30 percent,” De Guindos told an economic conference in the resort town of Sitges.

Bankia, which is asking the state for the biggest rescue in Spanish banking history, is responsible for “an important percentage” of the 30 percent of lenders “that have more difficulties”, he added.

Bankia, born out of the merger of seven savings banks in 2010, is asking the state for 19 billion euros ($24 billion) to repair its books, in addition to 4.5 billion euros already injected.

Spanish banks are at the heart of fresh market fears that the eurozone’s fourth-largest economy might have to seek an international financial bailout.

Moody’s on Thursday cut the debt ratings of 16 Spanish banks by one to three notches, citing the effects of the ongoing recession and the Spanish government’s own reduced creditworthiness.

The leading bank, Santander, and the number two, BBVA, were both hit with three-notch downgrades from Aa3 previously to A3, which for Moody’s is a upper-medium credit grade, with still low credit risk.