Spain says banks healthy while Berlin warns its laggards

Spain’s finance minister said on Saturday that the results of stress tests on Spanish banks would reassure investors, contrasting with Germany which said any failing lenders would get no help from Berlin.

Elena Salgado said Spain’s savings banks, or cajas, would have double the minimum capital level required to pass European Union stress tests, while the German finance minister threatened he could close lenders that failed checks.

“We are going to do the exercise of the stress tests to ... the whole of our financial system, and I think that with the measures that we have been taking of recapitalising, they will pass the stress tests,” Salgado told reporters on the sidelines of a meeting of European Union finance ministers in Hungary.

She also reiterated comments earlier this week that Spain was not at risk of seeking an international bailout after neighbouring Portugal was this week forced to ask for EU and IMF aid.

“Now I do not see any risk of contagion. I think we are totally out of this,” she said.

Salgado’s comments on successful bank stress tests were in contrast with those of her German counterpart, Wolfgang Schaeuble, who signalled he would rather see failing German banks close than call on Berlin for more financial aid.

Two German lenders, Helaba and NordLB, could fail Europe-wide testing after the bar was raised, demanding more better-quality capital to prove that lenders are robust. The stress test results are due to be published in June.

“If the results of the tests show a need for fresh capital, the owners are there to cover these needs,” Schaeuble said. “It is not the case that one can appeal to the state.