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Spain's Ibercaja says will not merge with Liberbank

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

A "stress test" by consultancy Oliver Wyman assessed at theend of September whether Spanish banks had enough capital tocope with adverse economic conditions and identified a totalshortfall of 53.9 billion euros.

Ibercaja alone would face a capital shortfall under anadverse economic scenario of 226 million euros while wouldLiberbank face a capital hole of 1.2 billion euros, the auditshowed.

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

Spain's banks must submit recapitalization plans to theircentral bank, and Spanish authorities will use the plans todetermine how much of a 100-billion-euro European credit linethey 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)(ReutersMessaging: paul.e.day.thomsonreuters.com@reuters.net))

Keywords: SPAIN BANKS/

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