Capital needs of Spanish banks 'among the lowest in Europe'

SPAIN'S banks' need for a capital injection is lower than that of the average EU country's financial institutions, says the Organisation for Economic Cooperation and Development (OECD).

Those banks which need the most capital – around 400,000 million euros in total – are in Greece, France and Germany.

Banks in Spain, Italy, Ireland, Portugal and Austria have capital needs below the EU average.

Greek banks need the most money, followed by the French, Belgian, German, Dutch and Polish entities, whilst Spain is near the bottom of the list.

Banks in the Eurozone continue to be at the crux of the financial crisis, says the OECD.

International confidence levels in banks in the Eurozone continue to be very low and will probably continue as such until underlying concerns about low capital levels of certain major banks are addressed, the organisation claims.

Current demands are not enough to build confidence in European financial institutions since they underestimate possible risks based upon the banks' own in-house risk assessment and they are not generating enough of a buffer zone in the event of problems, the OECD explains.

It says the average ratio of own capital to total share capital continues to be less than the five per cent stipulated by the OECD itself.

Banks in the Eurozone need to be more capable of absorbing major losses and increasing their own capital in relation to shares, and these are issues that must be dealt with in the next few years, the organisation stresses.