S&P release on Spain's €100bn EU bank bailout

Standard & Poor's said Thursday that the €100bn financing offered to shore-up Spain's banking system should give it enough capital to see it through to the end of next year. Below is the full text of the S&P release:

The EUR100 billion facility agreed between Spain and the European Union to support the Spanish financial system is enough to cover the system's potential capital needs for 2012-2013, said Standard & Poor's Ratings Services in its report "Spain's EUR100 Billion Bank Bailout Relieves Near-Term Uncertainties But Details Remain Sketchy," published today.

"We consider there is still uncertainty about the bailout implementation details, though, particularly regarding provisioning and capital requirements and the implications of the outcome of independent reviews currently underway," said Standard & Poor's credit analyst Elena Iparraguirre. "We are skeptical about the bailout being able to reduce the financial system's funding challenges in the short term, as well as on lending resuming any time soon."

Based on currently available information, and all other things being equal, we do not anticipate an immediate impact on our ratings on Spanish banks due to the EUR100 billion support line. However, given the uncertainties about the full details of the bailout, we do not rule out the possibility that we could revise down some of our assessments of the stand-alone credit profiles (SACPs) for some banks as more information is made available. This is because changes in provisioning or capital requirements could have an impact on the banks' financial profiles and on the actions they may take, even if they are unlikely to alter our estimates of the banking system's credit losses in 2012-2013.

For those banks subject to SACP revisions, we could lower our subordinated debt and hybrid debt ratings where applicable, because we notch down these debt ratings from our SACPs for the banks under our criteria. Our SACP revisions could also potentially affect our counterparty credit ratings on the banks if we consider that the capital support to be provided to each of the banks under the bailout is not enough, or that it's not in the form of an instrument to which we give full capital credit, to offset the effects of mounting financial stress.