Spain denies delay of second banking audit


MADRID, Spain — Spain denied Tuesday that a detailed audit of its stricken banks, which is to follow a first examination due by Thursday, has been delayed from the end of July to September. A financial source earlier said that the second of two audits ordered for the banks, many of them struggling with balance sheets heavily exposed to a property bubble that collapsed in 2008, has been pushed back as more information was needed for a more thorough analysis. Spain’s government won agreement June 9 for its eurozone partners to extend a rescue loan of up to 100 billion euros (US$125 billion) to salvage the crisis-hit banks. Ahead of that deal, Madrid requested two audits. The first audit, due by Thursday, inspected banks’ balance sheets and is expected to reveal how much capital they require to be able to withstand financial stress. That audit is being conducted by consultants Roland Berger of Germany and Oliver Wyman of the United States. A second, more detailed study to be carried out by Deloitte, KPMG, PwC and Ernst & Young, is to look at the valuation of banking assets, which have plunged in value along with the real estate sector. “It has been decided that in the second stage of this initiative, it would be good to obtain more information to make a more detailed analysis, more in depth,” the financial source said Tuesday. “That, obviously, will take longer than expected,” the source said, adding that it would be delayed to September. The delay only affected the second audit, not the first, said the source, who spoke on condition of anonymity.

But a spokesman for the economy ministry denied that the second audit had been delayed, saying that it would be delivered “around July 31.” Madrid needs the audit so as to assess precisely how much money the banking sector needs from the eurozone rescue loan. Spanish conservative daily El Mundo said the first audit would be released Thursday, discounting reports of a possible earlier release. The decision to delay the second audit was taken by “all participants in the audit,” the source said: the Bank of Spain, the Economy Ministry, the auditors and an advisory committee made up of members of the IMF, the European Central Bank and the Dutch and French central banks. “It was preferable to give a bit more time (to the second audit) and produce something that gives a more reliable picture and gives more confidence,” the source explained. The second study is aimed at examining “the deterioration in the assets of each banking group” and the required provisions to offset it, according to the Bank of Spain.