* BMN, Caja3, Ceiss and Liberbank seen needing public aid
* Central bank says all lenders will be recapitalised by
(Adds details on lenders)
By Jesús Aguado
MADRID, Oct 31 Spain's central bank gave the
go-ahead on Wednesday to the private capitalisation plans of
banks Popular and Ibercaja, though it said it expected
four other lenders to resort to public support.
The Bank of Spain findings may mean the government could end
up using more of the 100-billion-euro European credit line than
the 40 billion euros ($51.83 billion) previously estimated.
The supervisor said Banco Mare Nostrum, Caja3, Ceiss and
Liberbank were expected to require public aid and had submitted
restructuring plans to the supervisor and the European
Commission as required.
A September independent audit of the Spanish banking sector
identified seven out of 14 banks as needing a capital injection
in the case of a severe economic downturn. The results of the
Oliver Wyman stress test found the banks needed 59.3 billion
euros ($76.8 billion).
The banks had to present plans to Spanish authorities
detailing how they would plug their capital hole, either by
share issues, asset sales, forcing losses on junior bondholders
or transfer of real estate loans and property to the bad bank.
The Spanish government is setting up an asset management
company, or bad bank, for up to 90 billion euros worth of real
estate assets sitting on lenders' books after a property bubble
burst five years ago.
The bad bank is a condition for Spain to receive European
aid for crippled lenders. Spain is also considering seeking
additional EU help to lower its borrowing costs and improve its
Banco Mare Nostrum, a merger of four savings banks with
total assets of around 68 billion euros, was identified to have
capital needs of 2 billion euros.
A three-way tie-up between small banks Liberbank, Ibercaja
and Caja 3, aimed at helping the banks meet capital
requirements, was abandoned in early October.
The audit revealed the potential merger had a combined
deficit gap of 2.1 billion euros.
Once the merger plans collapsed, weaker banks Liberbank and
Caja 3 became candidates to be taken over by the state and sold
off since they were the most exposed with a capital hole of 1.2
billion euros and 779 million euros respectively.
Ibercaja has capital needs of just 226 million euros.
Separately, Liberbank said on Wednesday it would transfer
assets into the Spanish bad bank and it would still meet capital
requirements without turning to the state aid.
The planned merger between Unicaja, Caja Duero and Caja
Espana (Ceiss) has also been cast in to doubt by the audit's
As a group, the merger passed the stress test, but Caja
Duero and Caja Espana alone have a capital shortfall of 2.1
Popular's planned 2.5-billion-euro rights issue is
considered an important test of Spanish banks' ability to tap
the market and fill, or reduce, the 3.2 billion euros capital
hole identified by the test.
Analysts expect Popular's shares to be sold at a discount of
50 to 73 percent.
Spain's sixth-biggest lender needs to reduce its capital
shortfall by around 2 billion euros, if it wants to avoid a
public capital injection, by December.
In addition to selling new shares, Popular plans to raise
more capital through sale of non-core assets.
Among the lenders that failed the test, four have already
been nationalised: Bankia, Catalunya Caixa,
NovaGalicia Bank and Banco de Valencia and identified
as Group 1.
These banks are already in talks with Brussels and will be
the first in line to receive funds in November.
The central bank said all lenders subject to the audit,
which cost the banks 31.4 million euros to conduct, would be
fully capitalized by the end of the year.
($1 = 0.7717 euros)
(Reporting By Jesus Aguado; Editing by Paul Day, Helen
Massy-Beresford and David Gregorio)