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Spain Bank Profit Overestimate Risks Seeking Too Little Help

Spain, which for years underestimated losses at its banks, is poised to overestimate how much they can earn in an economy mired in recession.

One of two outside advisers hired by the Spanish government to conduct stress tests on the nation’s lenders estimated that losses could reach 274 billion euros ($347 billion) in the next three years. The adviser, management-consulting firm Oliver Wyman, predicted banks could earn 23 billion euros a year before loss provisions, about what they made in 2011, even if the economy contracted by 6.5 percent under an adverse scenario.