June 17, 2010 / 4:27 PM / 10 years ago

UPDATE 1-Spain stress tests to show bank strength-Santander

* Spain banks solvency verified by stress tests-Santander

* Santander best rated so far in Europe tests-govt source

(Adds details on Santander ranking, analyst comment)

SANTANDER, Spain, June 17 (Reuters) - Bank of Spain stress tests to determine banks’ capital strength will come out positive for most Spanish banks, the deputy chairman of Spain’s largest bank, Santander (SAN.MC), said on Thursday.

“I’m absolutely convinced that the stress tests will show the strength of the majority of Spain’s financial entities,” Matias Rodriguez Inciarte said at a conference.

His comments came before a government source told Reuters that Santander has the best rating so far in European bank stress tests. [ID:nLDE65G1M6]

The Bank of Spain said on Wednesday it would publish stress tests on individual Spanish banks to verify whether they have enough capital to withstand economic downturns.

Inciarte also said he believed European-wide stress tests would show the strength of the European banking system and help calm markets.

Mauro Guillen, head of the Lauder Institute at the Wharton School speaking in Santander, said he was not surprised at how well rated Santander was, but suggested others were perhaps not in such a strong position.

“It’s not surprising they are number one ... but there are some banks, and in particular some of the savings banks, that are not so solid.”

However, he noted that the Spanish banking system was largely sound.

The country’s 45 largely unlisted savings banks with excessive exposure to the property sector slump are immersed in a government-driven restructuring process to clean up their balance sheets and halve their numbers. (Reporting by Nigel Davies; Editing by Jon Loades-Carter)

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