Spanish banks vow to raise extra funds on own

Spanish banks vowed Thursday they would seek no public aid to raise the billions of euros needed to meet emergency EU demands that they strengthen their balance sheets.

The European Banking Authority (EBA) regulator calculated at 26.16 billion euros the amount Spain’s five biggest banks need to raise to meet new capital requirements agreed by leaders at an emergency summit in Brussels Wednesday.

The EBA said Santander, the eurozone’s biggest bank by market capitalisation, needed 14.97 billion euros but the bank itself insisted it could manage with 6.47 billion euros.

The other banks accepted the EBA’s calculations — 7.09 billion euros for BBVA, 2.36 billion euros for Banco Popular, 1.14 billion euros for Bankia and 602 million euros for La Caixa, owner of Caixabank.

They each insisted they would not need further public money to stabilise a sector that has already received 17 billion euros in state support.

The Brussels summit called on banks to raise their core capital ratio — a key measure of financial stability — to nine percent of their overall assets.

Santander’s chief executive Alfredo Saenz said the bank would “manage quite comfortably with very concrete plans to reach 9.22 percent and we are even working on plans to reach 10 percent.”

BBVA insisted it “is in a position to meet these new demands” without state support, echoing similar statements from all the five banks concerned.

Finance Minister Elena Salgado said Spanish banks “have the capacity to find these recapitalisation funds themselves,” adding: “I am convinced that the banks will do everything they can so that they do not need to seek public aid.”

Spanish Prime Minister Jose Luis Rodriguez Zapatero put the overall figure needed by the five banks lower than the EBA, saying they would save nine billion euros from converting some debt into shares.

“The amount needed for this recapitalisation process of the five big Spanish banks is 17 billion euros,” he said in Brussels.

This figure is still second only to the amount needed by Greek banks.

“Spanish banks have come out of the Brussels summit as the big losers of Europe,” said the Spanish daily El Pais.

Despite such concerns, shares in the five banks rose strongly on the Madrid stock market on Thursday. Santander jumped 7.53 percent, BBVA 10.21 percent and Caixabank 3.49 percent.