Spain’s Cajas Have 100 Billion Euros of ‘Problematic’ Assets

The total exposure of Spanish savings banks to real estate and building amounts to 217 billion euros ($297 billion), of which 100 billion euros is “potentially problematic,” the Bank of Spain said today.

Bank of Spain Governor Miguel Angel Fernandez Ordonez, speaking in Madrid, said provisions cover 38 percent of the assets at risk. He also said the decree tightening capital requirements for cajas was “absolutely necessary.”

Ordonez, who hasn’t spoken to reporters publicly since Dec. 13 when he said the state-run FROB rescue fund probably wouldn’t need to be tapped in 2011, described the fund as a “backstop” and a “guarantee” that all lenders will reach new capital requirements.

Spain’s government approved new capital requirements for lenders on Feb. 18 and set deadlines for lenders to meet the new rules or risk partial nationalization. The Bank of Spain is due to tell banks on March 10 how much additional capital they need and lenders planning initial public offerings have as long as a year to raise it.

Spanish Finance Minister Elena Salgado said on Jan. 24 the total capital requirements wouldn’t exceed 20 billion euros, and “all or part” of that would come from private investors.