Spain’s banking system is one of the world’s healthiest, even after five of the country’s lenders failed the European Union’s stress tests, an executive with the country’s largest bank said.

The test results, released, proved that “transparency is critical for the stability of the financial system,” Juan Rodriguez Inciarte, an executive director with Banco Santander SA, told reporters in Washington. The tests showed that the “the Spanish banking system is one of the strongest,” he said.
Four Spanish savings-bank groups and a bank seized by regulators failed EU stress tests for a combined capital shortfall of 1.84 billion euros ($2.4 billion). All eight Spanish commercial banks tested passed the examination.
Santander said its Tier 1 capital ratio would stay at 10 percent in 2011, the same level as at the end of 2009, under the most severe stress-test scenario. While earnings decline, the lender would continue to build capital and maintain its dividend payout policy under the most adverse scenario examined in stress tests, the Santander, Spain-based bank said in a statement.
(Source: Bloomberg)