Spain: Financial Sector Assessment Program-Technical Note-Stress Testing Banking System Resilience
IMF Staff Country Reports, November 13, 2017
Source details
- Canonical URL
- Spain: Financial Sector Assessment Program-Technical Note-Stress Testing Banking System Resilience
Other formats
Bibliographic details
- Published: November 13, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484327197.002
Summary findings
- The Technical Note discusses the results of the stress testing of banking system resilience in Spain.
- The results indicate that some banks may have difficulty enduring additional pressures on their profitability.
- Some banks are vulnerable to market losses arising from a rapid increase in interest rates, given their significant exposures to fixed income securities.
- Near-term funding and liquidity risks seem limited, but funding challenges are likely to grow.
- Several banks are heavily reliant on central bank funding.
Vulnerabilities identified
- Profitability pressure: some banks may struggle to endure additional pressures on profitability.
- Interest rate and market risk: vulnerability to market losses from a rapid increase in interest rates due to significant exposures to fixed income securities.
- Funding concentration: several banks heavily reliant on central bank funding, implying potential dependence risk.
Funding and liquidity outlook
- Near-term funding and liquidity risks: seem limited.
- Medium-term funding outlook: funding challenges are likely to grow.
Policy recommendations and implications
- Authorities are encouraged to continue to monitor closely interest rate and government bond market risks in their stress testing exercises.
- Implicit policy focus: strengthen monitoring of market-bank nexus, liquidity stress testing, and central bank funding reliance.
Content in this bundle
- Country Report