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Spanish Banks Face 'One of the Worst' Years
06 April 2011 @ 16:13

MADRID—Three years into Spain's economic crisis, the worst could still be to come for the country's ailing banks as they grapple with falling profits and rising bad debt, the central bank chief warned Tuesday.

"2011 will be another year of adjustment, and for the banking sector, it will be one of the worst," Bank of Spain Governor Miguel Ángel Fernández Ordóñez said at a conference.

Mr. Fernández Ordóñez said bank revenue will be under pressure from weak demand for credit and rising financing costs, while banks will be forced to continue writing off large volumes of souring assets.

Also, the country's unlisted savings banks, known as cajas, must complete a government-driven overhaul that will see most of them convert into listed banks and reduce their number by nearly one third. The restructuring has entered a critical phase, with the cajas being forced to raise over €14 billion ($19.9 billion) in new capital to meet new minimum solvency requirements.

Read the rest of the article at the Wall Street Journal



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