Spain Needs $76 Billion, Bank Audit Finds

An independent assessment of Spain’s most troubled banks suggests the nation’s industry may need as much as 59.3 billion euros, or $76.4 billion, to recover.

The report may enable Madrid to appeal to European finance ministers for bank rescue loans, which they have agreed to extend, The New York Timesreports.

The number from the report was not too far off from what was expected and well below the 100 billion euros, or $128.8 billion, in bailout money which Spain had bargained for with other euro zone countries in June.

According to the report assessed by the consulting firm Oliver Wyman, of the 14 banks, half of them do not need any assistance with emergency funds. The country’s three largest financial institution’s-Santander, BBVA, and La Caixa-are included in the list of banks who do not need assistance.

At a news conference in Spain, Fernando Jiménez Latorre, the Spanish secretary of state for the economy presented the reports’ findings and said Spain would likely ask for about 40 billion euros, or about $50 billion.

During the conference, Latorre said the audit should squelch some of the backlash Spain had received among investors who wonder whether the country who had been involved in years of reckless property lending can survive.

The audit was made necessary during bailout negotiations when one of the country’s biggest real estate lenders, May of Bankia,was seized by the government.

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Latorre said the new findings should asses the Spanish system’s strength:

“[the audit] should remove all the doubts about the strength of the system…The bulk of it is solid, and the problems are well identified.”

Managing director of the global lender International Monetary Fund, Christine Lagarde called the audit “significant and hopeful,” Reutersreported:

“I strongly support the authorities’ commitment to ensure that capital needs are met in a timely manner and that the weakest banks are dealt with effectively.”