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Spanish Banks' Borrowing Up; Recapitalization Coming?
CNBC.com | April 13, 2012 | 05:17 AM EDT

Spanish banks' borrowing from the European Central Bank almost doubled in March from February to 316.3 billion euros ($415.9 billion) as the question whether Spanish banks need to be recapitalized hangs over the sector like the sword of Damocles.

Worries about the country's housing sector and a recent spike in government bond yields have rattled investors' nerves over the past two weeks and last Tuesday, Spanish central bank Governor Miguel Angel Fernandez Ordonez said "if the economy worsens more than expected, it will be necessary to continue increasing and improving capital as necessary in order to have solid entities.”

Marco Troiana, analyst at Berenberg Bank in London, told CNBC.com that the central bank governor didn't specify which Spanish banks would need additional capital. However, he added" I wouldn't believe that big banks like Santander and BBVA will need to raise capital from investors as they are focusing on boosting the capital levels by scrapping dividends and debt to equity swaps"

On Thursday, Spanish lender Banesto kicked off the first- quarter Spanish bank reporting season, posting an 88 percent slump in profits as it set aside 475 million euros in provisions for potentially non performing property loans - only 50 percent of the total provisioning needs it expects for the full year.

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