Not everyone welcomes Spanish stress test results

Most of the Spanish press is broadly in agreement with the country's central bank and the government, in hailing the results of the bank stress tests as satisfactory and fairly positive. 

Despite the fact that five out of the seven banks which failed to pass the European bank stress were Spanish, the central bank Banco De España and the government pointed out that although the test was supposed to cover at least 50% of banking institutions, in Spain it covered almost 100% of the sector.

Both sources argued that the stress test was using an unlikely and adverse scenario, including a 2.6% GDP decline in 2010-2011.

‘The results were satisfactory,’ said finance minister Elena Salgado in a press conference after the results were published. ‘Only five institutions failed with a shortfall of €1.84 billion, an amount that is already available at the state founded Fund for Orderly Restructuring (FROB). The largest institution which failed - Caixa Catalunya - merely accounts for less than 2.3% of the banking sector.'

‘We were the first to ask for stress test results to be published, to combat a public perception that our savings banks are in a worse situation than they really were,' she said. 'The transparency of these has benefited us. About 95% of Spain’s lenders were tested, compared with 60% percent for Europe. If we had done only 60%, all of our savings banks would have passed.'

Leading Spanish columnist, Alberto Artero, AKA Mcoy, was more critical about the results, however. In his column in Cotizalia, titled 'A bucket of cold water', Artero said:

‘The Spanish banking system is healthy thanks mainly to the role of the two largest banks Santander and BBVA... which passed the test with flying colours... However for the stress test to be realistic it should have had a more stringent scenario for those assets held until maturity, mainly related to Spanish real estate, which in Spain should be given a far greater emphasis compared to share prices, trading portfolios or exposure to sovereign debt.'

'Therefore, a great deal of the exhilaration of last Friday will be short lived and won’t boost the lending activity. I regret to say that it is time to put the champagne back on ice,’ he said.