## 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](https://www.imf.org/en/publications/cr/issues/2017/11/13/spain-financial-sector-assessment-program-technical-note-stress-testing-banking-system-45393)

## Other formats

- [Markdown version](/en/publications/cr/issues/2017/11/13/spain-financial-sector-assessment-program-technical-note-stress-testing-banking-system-45393/index.md)
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## Bibliographic details
- Published: November 13, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484327197.002

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### 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.

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## Content in this bundle

- **Country Report**
  - [Country Report (Markdown version)](/-/media/files/publications/cr/2017/cr17342.pdf.md){rel="alternate" type="text/markdown"}
  - [Country Report (PDF)](/-/media/files/publications/cr/2017/cr17342.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2017/11/13/spain-financial-sector-assessment-program-technical-note-stress-testing-banking-system-45393_