June 9, 2012 / 1:25 AM / 5 years ago

Spain's banks need at least 40 bln euros - IMF

An employee at the Belgian Central Bank adjusts fifty-euro notes with a machine in Brussels December 8, 2011.Yves Herman/Files

WASHINGTON (Reuters) - Spain needs about 40 billion euros in extra capital injected into several banks to allow them to withstand severe economic conditions, the International Monetary Fund said on Friday.

The IMF said its "stress test" does not include extra capital that it recommends Spain would need as a buffer to account for restructuring costs and loan losses. An IMF official said such a buffer usually would be 1.5 to two times larger to convince markets that Spain has a credible cushion to handle shocks.

In Spain's case, that would bring the size of capital required to stabilize its banking system to as much as 80 billion euros, although the IMF did not specify a figure in its Financial Sector Assessment Program report released on Friday.

Reporting By Stella Dawson; Editing by Leslie Adler

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