Five Spanish lenders fail stress tests but no more capital needed

As expected, five of the eight European banks that failed the European-wide stress tests were Spanish, but the Bank of Spain insisted that none of them will require further injections of capital.

According to the results released Friday by the European Banking Authority, the five Spanish lenders that failed the tests were savings banks CaixaCatalunya, Unnim, Caja de Ahorros del Mediterráneo, Grupo Caja 3 and commercial bank Banco Pastor. Of the other three that failed the tests, two were Greek and one Austrian. The main Spanish banks such as BBVA and Santander passed the tests comfortably.

The central bank explained that the definition of capital did not include generic, or anti-cyclical, provisions, which are unique to Spain, nor mandatory convertible bonds with conversion dates further down the road. If these items are included, no further capital is required.

Of the 90 banks tested in 21 European Union countries, 25 were Spanish ? almost the whole of the country's banking system, and 100 percent of listed banks and all of the cajas. The average in the rest of Europe was 60 percent of the system.

Economy Minister Elena Salgado said the results were "excellent" and showed the strength of the Spanish financial system.