Unlisted banks will need 10-percent solvency ratio

Unlisted banks in Spain will be required to have a minimum core capital ratio of 10 percent, up from 6 percent at present, the Economy Ministry announced late Wednesday.

Economy Minister Elena Salgado had previously said the solvency ratio for such lenders would be between 9 and 10 percent.

The 10-percent requirement will also apply to banks that do not have foreign shareholders accounting for at least 20 percent of their capital and that in the previous quarter relied on the international wholesale markets to fund over 20 percent of their lending net of liquid assets.

The ministry said the higher ratio for banks reliant on the wholesale markets was needed to "maintain the full confidence of investors" even in "adverse circumstances."

For the rest of the country's banks, the minimum core capital adequacy ratio is being raised to 8 percent from 6 percent.

The Bank of Spain will calculate how much more capital banks require. Salgado has estimated the figure for the entire sector at 20 billion euros.

Banks will have to explain how they plan to recapitalize and do so by September. The government has warned that banks that fail to comply face being obliged to transform themselves into commercial banks for partial nationalization through an injection of capital from the Orderly Bank Restructuring Fund (FROB).