Spain says banks need $21 billion in new capital

MADRID: The Bank of Spain says the country's banks need Euro 15.5 billion ($ 21 billion) in new cash to boost the sector's solvency, a source of worries that the government might need a costly bailout.

The number is far less than the euro20 billion the government had said was the maximum the sector might need when last month it announced new capital ratio requirements for banks and, in particular, the troubled savings banks.

The Bank of Spain said a total 12 banks need to raise capital to comply with February's decree which was approved Thursday in Parliament. Two are Spanish banks, two are units of foreign banks and eight are savings banks.

Hours earlier, Moody's downgraded Spain's sovereign debt, in part over fears the government's bank restructuring cost estimate was too low.