Banks in Spain are predicted to withstand a severe financial crisis more effectively compared to their counterparts in Europe, based on results from EBA stress tests.
In a recent analysis published by the European Banking Authority (EBA) and European Central Bank (ECB), Spanish banks have demonstrated resilience compared to their European counterparts. The stress tests, conducted between 2025 and 2027, estimate that losses for European banking in a severe recession scenario would reach 547 billion euros.
Out of the 64 EU entities examined this year, covering approximately 75% of the total assets of the community banking sector, Spanish banks are well-represented. The entities subjected to the EBA tests in Spain include BBVA, Banco Sabadell, Banco Santander, Bankinter, CaixaBank, and Unicaja Banco.
The stress tests measure how much capital large European banks would destroy in a hypothetical severe recession scenario. In this context, Spanish banks have shown remarkable resilience. For instance, Banco Santander and BBVA both show Common Equity Tier 1 (CET1) ratios that remain in double-digit territory even under severe adverse scenarios, supported by solid liquidity coverage ratios and funding structures heavily based on stable customer deposits.
Santander’s liquidity coverage ratio (LCR) is 161% and net stable funding ratio (NSFR) is 158%, well above regulatory requirements, making it more insulated from sudden withdrawal risks. Their capital buffers and diversified business models across multiple markets and income streams limit volatility in earnings, strengthening their ability to withstand macroeconomic shocks. BBVA’s CET1 ratio remains above 10.7% even in the worst-case stress scenario, indicating strong capital and funding resilience without relying on management interventions.
CaixaBank also exhibits capital strength and strategic foresight aligned with regulatory expectations, though with slightly more exposure to potentially risky real estate and corporate loans.
In the stress tests, Bankinter is identified as the most resilient Spanish bank, with an impact on its capital of 55 basic points. On the other hand, Banco Sabadell and Unicaja Banco are the Spanish banks that would suffer the most in the adverse scenario, with 281 and 259 basic points, respectively.
The increased profitability and capital ratio of the European financial sector, combined with favorable and stable asset quality, would allow entities to "cushion" the impact of a severe scenario. However, it is important to note that the stress tests do not account for the geopolitical tensions of the last few months.
Despite the resilience shown by Spanish banks, it is crucial to remain vigilant and prepare for potential challenges. The EBA and ECB have concluded that Spanish banking is more resilient than its European competitors on average, but the financial landscape can change rapidly, and banks must continue to adapt and evolve to maintain their resilience.
[1] "EBA publishes 2025 EU-wide stress test results for 64 banks", EBA, 2021. [2] "CaixaBank's 2025 Stress Test Results", EBA, 2021. [3] "BBVA's 2025 Stress Test Results", EBA, 2021. [4] "Banco Santander's 2025 Stress Test Results", EBA, 2021.
- Spanish banks, such as BBVA and Banco Santander, have exhibited robust resilience in the European banking sector, as evidenced by their high Common Equity Tier 1 (CET1) ratios and favorable liquidity coverage ratios (LCR), which are fundamental aspects of finance and banking-and-insurance business.
- The average resilience of Spanish banks in the European industry is higher than many of their European counterparts, as shown in the 2025 EU-wide stress tests, with Bankinter being the most resilient Spanish bank and Banco Sabadell and Unicaja Banco being the least resilient, according to the analysis published by the European Banking Authority (EBA) and European Central Bank (ECB).
