Spanish banks need €60bn: European reaction European Banking Authority The European Banking Authority (EBA) welcomes today's announcement by the Spanish Authorities of the results of the independent valuation of the Spanish banking sector. The assessment process and the stress test results disclosed today are a major step towards strengthening and restoring the soundness of the Spanish banking system, which is ultimately crucial for a sustained recovery of economic growth and employment. The bank-by-bank bottom-up stress test and asset quality review of each Spanish bank has been conducted by an external consultant and closely overseen and approved by a Strategic Coordination Committee (SCC) and an Expert Coordination Committee (ECC) involving, together with the Spanish Authorities, the European Commission (EC), the EBA, the European Central Bank (ECB) and the International Monetary Fund (IMF). EuroGroup On July 20, 2012, the EuroGroup decided to grant financial assistance to Spain in the form of a banking recapitalisation programme. It was agreed that it would cover financing needs of up to €100bn, while the specific amount would be determined based inter alia on a thorough bottom-up assessment of capital shortfalls for individual banks. The results of the bank-by-bank stress test conducted by an external consultant with regard to 14 banking groups comprising more than 90pc of the Spanish banking system were published today. I am comforted by the fact that the total capital shortfall of the Spanish banking sector comes out at slightly less than €60bn. The final State aid provided to Spanish banks will be lower than the reported capital shortfall, given measures to be taken by the banks in accordance to their recapitalisation and restructuring plans. The assessment shows that the total financial assistance agreed in July should be more than adequate to cover the final capital needs, including a comfortable safety margin. I very much welcome that progress on implementing the commitments as defined in the Memorandum of Understanding is well on track. I am confident that the reforms attached to this financial agreement will contribute to ensuring a return of all parts of the Spanish banking sector to soundness and stability. European Central Bank The European Central Bank (ECB) welcomes today's publication by the Spanish Government and the Banco de España of the results of the independent evaluation of the Spanish banking sector. Consistent with the programme supported by the EU, as stated in the Memorandum of Understanding on financial-sector policy conditionality of July 20, 2012, external consultants have conducted a bank-by-bank bottom-up stress test and an asset quality review. ECB staff were involved in the Strategic Coordination Committee and the Expert Coordination Committee, together with the Spanish authorities and staff from the European Commission, the European Banking Authority and the International Monetary Fund. These committees have overseen and approved the work carried out by the external consultants, and they have assessed the stress test as stringent and the asset quality review as thorough. The ECB strongly supports the Spanish authorities" plans to ensure that capital needs are met in a timely manner. IMF (Christine Lagarde) I welcome the completion of the Spanish banking sector valuation announced today by the Spanish authorities. This thorough and transparent independent valuation of assets and stringent stress tests will help provide significant and helpful differentiation among financial institutions. Public funding of the banks" actual capital needs, which are expected to be lower than the amounts identified in the stress tests, can be financed comfortably under the recapitalization program supported by Spain's European partners. I strongly support the authorities" commitment to ensure that capital needs are met in a timely manner and that the weakest banks are dealt with effectively. These key steps, as recommended in the IMF's Financial Sector Assessment Program (FSAP) for Spain conducted earlier this year, will contribute to build a sounder banking system, which in time will help to restart credit flows and boost growth and employment.