The Spanish bank aims to demonstrate tomorrow that is the most creditworthy of Europe.
Madrid, July 22 (Xinhuanet) .- The Spanish bank aims to demonstrate tomorrow with the publication of the strength tests, which measure the carrying capacity of each entity to an extreme macroeconomic scenario for 2010 and 2011, which is at least as the most creditworthy of Europe.
Data from the so-called "stress test" for almost thirty Spanish banks and will be, sto credits, published initially by the European Committee of Banking Supervisors (CEBS, for its acronym in English), along with another 64 entities from the rest of Europe.
In this analysis, Spain is the European country that contributes most institutions, 27 in total: 8 banks, 11 mergers or alliances of independent cases and 8 cases, including CajaSur, because when testing was performed was, global agenda credits, not yet awarded to the BBK .
The Banco de Espana further information on the CEBS with individual data used to determine the ability of each of the banks, or alliances of the latter institutions under the formula of an institutional system of protection.
According to financial sources consulted by , in the case of Spanish banks, the tests performed by, jumpgate evolution credits, the supervisor will make a simulation of the institutions will have capital at the end of next year under current conditions, considered as "baseline scenario" versus levels that would have to face after conditions "very bad" during 2010 and 2011.
This latter case simulates a mean cumulative fall of 2.6% Spanish economy during the period of "stress", which amounts to a drop of 3 percentage points over the expected average growth of 0.4% across the two years in the base scenario.
So, if in normal Spanish economy could go back between 0.6 and 0.4% in 2010 and grow in 2011 between 0.8 and 1%, if adverse would fall 1.4% this year and 1.2% the next, a cumulative decline of 2.6%.
As for the unemployment rate in the baseline scenario would be close to 20% in 2010 and 21% in 2011, while the unemployment situation would adversely 21.6 percent of the active population at the end of the period.
Also, the test of the Bank of Spain rrred to in the adverse situation of interest rates in the euro area lower than the current, further reducing the income of the bank, and a cumulative fall of housing prices close to 26% .
And last but not least, the instability of Greece took the evidence in the case of a sovereign debt crisis and the consequent risk that a country incurs in its payment obligations.
Thus, banks will have to depreciate the value of their debt portfolios according to the country that issued it, still suffer most bondholders Greeks, followed by Portuguese and Spanish.
With all this, trying to make an estimate as accurately as possible the solvency would have each entity at the end of a difficult situation and see the maximum speed at which consume capital.
One of the formulas for measuring the solvency of institutions shall be indicated the percentage of equity that have higher quality as measured by the "Tier 1 ratio."
Thus, we compared the proportion of top quality resources that had a bank in early 2010 and late 2011 and will be considered approvedall entities in the end keep a minimum 6% of Tier 1.
It is assumed that all Spanish banks and reach this goal, however, some entities from other countries will not be able to reach, so you will have to raise capital or receive public assistance to increase their liquidity buffers.
Both the industry and the Government hoped that the publication of the results reassure the markets, as it happened in the past with the United States, and will put fair value at each financial system.
The following is a table accompanies the approximate number of different variables that the Bank of Spain has taken into account when drawing up the "stress test", both under normal and adverse conditions at the end of the period: Scenario Scenario base adverse ————————————————- 2010/2011 —————- accumulated GDP +0.4% -2.6% Unemployment rate 21% 21.6% -9.9% Housing Price -26 % MarketWatch