MADRID (MNI) – Lack of confidence in Spanish markets is unfounded,
European Central Bank Governing Council member Miguel Fernandez Ordonez
said Monday.
Credit demand has already started to recover and once investment
picks up, the situation of domestic banks position will be “really
solid” thanks to the recent measures taken by the government, the
governor of the Bank of Spain told Parliament.
The Bank of Spain’s supervision of the banking sector is among the
toughest in Europe, he reminded.
The measures introduced Friday set core tier 1 capital requires at
8-10% of risk-weighted assets, higher than under the Basel accords, he
said, reminding that the Basel III targets must be met by 2019.
The problematical construction sector represents only a 22% of
credits of savings banks, Ordonez said.
While markets’ perception of mortgages is negative, the ratio of
unpaid mortgages is low, he said, noting that 10% incurred losses are
covered 100% and in the worse stress scenario they would be covered 77%.
In March, requirements of public capitalization for institutions
that could not obtain private means of financing to fulfill core capital
targets will be public, as they will have to use government-backed funds
from the FROB.
Institutions will have until September to secure capitalization,
though (including the use of FROB) they will be forced to present a plan
and alternatives. Eventually, the Bank of Spain might look into
extending until 2012 the requirement in some specific cases.
Ordonez said he was not in favor of intervention in credit
institutions, since this costs more to the taxpayer in the end as it
creates more distrust from the market.
If forced to, authorities would intervene to support wobbly banks,
but that risk appears highly unlikely, he said.
[TOPICS: M$$EC$,M$$CR$,M$X$$$,MT$$$$,MGX$$$]