Spanish banks may need to raise as much as €50 billion ($68.77 billion) boost their solvency and regain market confidence, more than twice the amount the government has said would be needed, Moody's Investors Service said Monday.
The estimate is up from the €17 billion that Moody's had calculated in December, and would be mostly concentrated in the savings banks sector, senior analyst Alberto Postigo said in the rating agency's Weekly Credit Outlook publication.
Moody's warning came as Qatar said it plans to invest €300 million in Spain's savings banks, or "cajas." It would be the first injection of sovereign capital into the savings banks since the start of the 2007-2008 crisis.
Qatar's Prime Minister Hamad bin Jassim bin Jaber bin Muhammad al-Thani made the statement in Doha, Qatar, in a press conference held jointly with the visiting Spanish Prime Minister José Luis Rodriguez Zapatero, Spain's government said in a press release.
Moody's revised estimate assumes that the savings banks will need to reach a core capital ratio of 10% in coming months, in line with new banking rules approved earlier this month by the Spanish government.
The new rules impose minimum capital ratios of 8% on all the country's banks. They also set a higher minimum ratio of 10% for lenders that don't have a significant share of private investors among their shareholders, and depend on wholesale markets for their financing, which is the case for most of the savings banks.
To meet the higher requirements, Spain's savings banks are scrambling to find private investors willing to buy parts of their businesses. Four out of 17 entities have said they plan to sell shares in initial public offerings.
The Spanish government said banks will need to raise about €20 billion to satisfy the new rules and said it will take stakes in lenders that fail to do so by September, through its Fund for Orderly Bank Restructuring.
In the report Monday, Mr. Postigo said that Moody's remains cautious on whether the government's plan for recapitalization will allow Spanish financial institutions "to regain markets' confidence, as this would very likely require a full clean-up of losses embedded in banks' balance sheets."
Doubts about the health of the savings banks, known as cajas, had emerged in the wake of Ireland's banking crisis. Like Ireland, Spain is grappling with the collapse of a huge housing boom.
In an attempt to remove these doubts from investors' minds, the Bank of Spain obliged the country's banks to disclose the full extent of their exposure to the ailing Spanish real estate sector.
The central bank said last week that the cajas hold some €100 billion in "potentially problematic" real estate assets, out of a total exposure to the building sector of €217 billion.
Mr. Postigo said that these "potentially problematic" assets are "credit negative" for Spain. However, he added that making public the data is a "significant and positive step" toward restoring market confidence in the banks.
"Confidence in Spain's savings banks will only be completely restored once the problematic exposures are translated into losses and the adequacy of bank capital is robustly tested," Mr. Postigo said.
