Recapitalisation no help to Spanish banks

Europe's key banks are to increase their capital reserves and hold nine percent in core capital to cushion any defaults on bonds from Eurozone debtor countries. But for Spain this form of recapitalisation will be pointless, fears the business paper Cinco Días: "The EU governments hope to restore confidence in the European financial system by forcing the banks to raise their capital after recognising the potential losses that could arise as a result of sovereign debt. But the problem of the Spanish banks is their exposure to debts from the construction sector, not government bonds. ... In theory each euro in additional capital would help the banks towards recovery. But the recapitalisation doesn't create any incentives for solving the problems of the loans that have been made to the building sector."

» full article (external link, Spanish)
More from the press review on the subject » EU Policy, » Fiscal Policy, » Banks, » Spain
Who's saying what » Ways out of the debt crisis

» To the complete press review of Thursday, October 27, 2011