By Jeannette Neumann and Christopher Bjork
MADRID--Small Spanish lender Liberbank SA (LBK.MC) was the only
one of 16 lenders from the country to fail a balance-sheet exam by
European regulators.
The bank had a capital shortfall of 32.2 million euros ($40.8
million) as of Dec. 2013, but the lender has addressed that capital
deficit by raising EUR636.7 million through to September 2014, the
European Central Bank said in an analysis published Sunday.
The European Central Bank said that its asset quality review
showed that Banco Santander SA (SAN), the eurozone's largest bank
by market value, had a core capital buffer of 10.34%. Lenders
needed a buffer of above 8% of risk-weighted assets to pass the
test.
In the "adverse" scenario, which tests the strength of banks'
balance sheets amid a hypothetical deteriorating economic
environment, Santander had an 8.95% capital ratio, the ECB said.
Banks had to maintain a capital buffer of at least 5.5% in the
adverse scenario.
For Spain, the adverse scenario included a significant drop in
home prices through 2016 as well as a contraction of the economy
this year and next, with growth of only 0.1% in 2016.
Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain's
second-largest bank by market value, had a core capital buffer of
8.97% under the worst-case scenario, while La Caixa, the majority
owner of Caixabank SA (CAIXY), the country's third-largest bank,
was 9.25%, the ECB said.
The ECB said its asset quality review showed that BBVA had a
core capital ratio of 10.54%, while La Caixa had a 10.24%
ratio.
Spanish bank executives, cabinet ministers and the country's
central bank have said in recent months that they expected Spain's
lenders to perform well on the balance sheet tests because lenders
already underwent similar exams two years ago.
In 2012, Spain requested EUR41 billion from the European Union
to bail out several regional savings banks, known as cajas in
Spanish, which faced ballooning losses as real-estate developers
stopped paying back loans issued during the country's building
boom.
A condition of the bailout funds was a deep-dive look at Spanish
banks' books. Oliver Wyman, a consultancy group, said in September
2012 that Spain's lenders had a capital deficit of EUR53.7 billion.
Spain ended up borrowing EUR41 billion since some banks managed to
raise capital from investors.
Write to Jeannette Neumann and Christopher Bjork at
jeanette.neumann@wsj.com