Banks without aid face 25 billion in cleanups

BBVA, Grupo Santander and La Caixa started addressing new provisioning and capital requirements mandated by EU financial reforms. The Bank of Spain recommended that several other banks be added to the list based on preliminary calculations.

Ultimately, none of all the banks in question (La Caixa, Santander, BBVA, Sabadell, Popular, Bankinter, Unicaja and Kutxabank) can meet capital requirements dictated by the financial reforms by the end of 2012 without asking for aid or updating their capital requirement objectives.

Together, the banks have not asked the Frob for aid in the form of either preferential or capital subscriptions, and they have raised 25.051 billion euros. This is only half of what De Guindos has estimated that the entire banking system needs to raise in order to reach healthy levels.

Santander, which includes Banesto, will need some 6.1 billion more euros. To meet this level, the bank?s additional capital requirements need to increase beyond the 2 billion that covers them at this time. Another 1.8 billion in real estate asset provisions were already taken care of in 2011, so this year the bank should be able to provision an additional 2.3 billion. Santander has still not accounted for the 900 million surplus that resulted from selling its subsidiary in Colombia, so there are 1.4 billion euros that it can use to meet capital requirements. The bank is saying that it will have more than enough capital to meet current requirements and that it will obtain this capital this year through normal revenues.

BBVA will need 4 billion euros in total. It needs 1.2 billion in capital reserves, 2.2 billion in provisions and 600 million in generic provisions in order to clean up its real estate assets. BBVA?s financial director, Manuel González Cid, said yesterday that the impact on the bank's accounts would be 1.96 billion euros, a number that will shrink to 1.36 billion by freeing up 460 million of the generic provisions and another 140 million due to a favorable tax impact. BBVA affirms that this impact will be absorbed completely during 2012. Total remaining capital reserves equal 0.5% of the bank's principal capital, which is less than estimated results for this year.