Spanish banks 'have €59bn shortfall'

An independent audit of Spain’s troubled banks shows a shortfall of €59.3bn to cover for an economic downturn.

The stress tests’ findings, released by consultants Oliver Wyman today, will help the country decide how much money it will tap from a €100bn European loan facility to prop up its financial sector.

The Bank of Spain’s figure does not include the impact of ongoing banking mergers or taxation.

Including those two elements, the shortfall drops to €53.7bn.

The Spanish government yesterday announced the country’s most severe round of budget cuts yet.

The new batch of measures and reforms are aimed at convincing international authorities and investors that it is on track to meet its deficit reduction targets.

As concerns mounted that the country will soon seek a bailout, Finance Minister Cristobal Montoro said the draft budget for 2013 would cut overall spending by €40bn. He said cuts for ministries would average 8.9 %.

The package came in the wake of a violent protest in Madrid and big falls in Spanish stocks.