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Spain's Ibercaja says will not merge with Liberbank

Tuesday, 9 Oct 2012 | 2:43 PM ET

MADRID, Oct 9 (Reuters) - Unlisted Spanish bank Ibercaja said on Tuesday it would not go ahead with a merger with Liberbank and also involving Caja 3, after an independent audit showed the resulting company would have capital needs of 2.1 billion euros ($2.7 billion).

A "stress test" by consultancy Oliver Wyman assessed at the end of September whether Spanish banks had enough capital to cope with adverse economic conditions and identified a total shortfall of 53.9 billion euros.

Ibercaja alone would face a capital shortfall under an adverse economic scenario of 226 million euros while would Liberbank face a capital hole of 1.2 billion euros, the audit showed.

The merger would have created the country's seventh-biggest entity with more than 115 billion euros in assets.

Spain's banks must submit recapitalization plans to their central bank, and Spanish authorities will use the plans to determine how much of a 100-billion-euro European credit line they need to tap. ($1 = 0.7754 euros)

(Reporting By Paul Day; Editing by Gerald E. McCormick)

((paul.e.day@thomsonreuters.com)(+34 91 585 83 08)(Reuters Messaging: paul.e.day.thomsonreuters.com@reuters.net))

Keywords: SPAIN BANKS/