26 October 2012

IMF: Statement on the first financial sector monitoring mission to Spain

All deadlines established in the Memorandum of Understanding (MOU), agreed between the Spanish and European authorities, have been met. It will be important to maintain the momentum as challenging steps lie ahead. More specifically, the preliminary report finds that:

• On the macro-financial context. Financial market conditions have improved since the announcement of the ECB’s Outright Monetary Transactions programme, though they remain fragile, and the economy and banks face headwinds.
• On bank restructuring and resolution. The bottom-up stress test was technically robust and provides a sound basis for indentifying undercapitalised banks. As already envisaged under the MOU, the capital shortfalls need to be quickly made up, recently-created burden-sharing tools applied, and non-viable banks promptly wound down. New mergers that do not clearly generate value or that place undue constraints on system-wide credit supply should be avoided.
• On the Asset Management Company (AMC). Key design features and the general legal framework of the AMC have now been defined. However, strong efforts will be needed to make the AMC fully operational by the end-November deadline. It will be important to ensure the right incentive structures, especially for the independence of AMC management and the effective management of the transferred assets.
• On burden-sharing and resolution framework. The new law is a significant achievement. A governance model for nationalised banks that preserves their autonomy should also be considered.
• On regulation and supervisory framework. Significant progress has been made, including adoption of new consumer protection and securities legislation.

The second financial sector monitoring report is expected to be produced in the first quarter of 2013.

Press release

© International Monetary Fund