Spanish banks helped boost the country's booming property mortgages and loans

Spanish banks helped boost the country's booming property mortgages and loans to developers may need further 90 million euros ($ 120,000,000,000) in the capital, Moody's Investors Service said.

This estimate is based on a scenario in which lenders will require a Tier 1 capital ratio, a measure of financial strength, up 12 percent to take advantage of the financing, Moody's said in a statement. Spanish banks declined today, led by Banco Santander SA, the largest in the country.

"Given the situation after Ireland, where banks must be recapitalized at a much higher level of capital, a core Tier 1 ratio of 12 percent, stress tested to see what that means in the context of Spain , if Spanish banks had to be recapitalized to a higher level in order to maintain market confidence, "said Kathrin Muehlbronner, an analyst at Moody's, in a telephone interview.

The calculations shown by Moody's the difference in openness between analysts and the Spanish authorities regarding the estimates for the size of the needs of lenders of capital possible. Bank of Spain Governor Miguel Angel Fernandez Ordonez, said two days ago that he saw no need for lenders to get more funds from a central bank bailout in 2011 beyond the 11 billion euros already committed and that investor perceptions of the health of the industry is "much worse than reality itself."

Under its "base case" scenario, Moody's expects "relatively moderate" recapitalization needs of 25 million euros, if lenders must maintain a Tier 1 ratio of 8 percent, according to industry ratings. This figure and the largest estimate includes both the amount provided by the bailout fund.

Credit Rating

Spain has created a fund, known by its acronym FROB, which can take as many as 90 million euros in debt to accelerate mergers and help the banking system to obtain new capital.

"Everybody has to play its role and the day the governor of the Bank of Spain says Spanish banks need 90 billion euros and FROB not large enough, we lost," Juan José Toribio, IESE professor school Business and a former head of financial policy in the ministry of finance in the country, told a press conference today.

Moody's also affirmed the credit rating of Spain can be cut from Aa1 of concern about rising borrowing costs, the potential losses in the banking system and the regional government deficit. The refinancing of the needs of Spanish lenders may enter the top of the € 170 000 000 000 Treasury of the country has to increase the company's credit risk.

Santander fell 2.8 percent to 8.13 euros at 13:23 in Madrid trading, while Banco Bilbao Vizcaya Argentaria SA, the second largest bank, fell 2.3 percent to 7.80 euros .