Spain Said to Weigh Banks Using EU30 Billion of DTAs as Capital

Spain may allow banks to keep counting about 30 billion euros ($41 billion) of deferred tax assets as capital to help the financial system adapt to new regulations, said three people with knowledge of the matter.

The government still hasn’t made a final decision, said the people, who asked not to be identified because the information isn’t public. One person said the amount will probably be about 28 billion euros. Officials for the Budget Ministry, the Economy Ministry and the Bank of Spain declined to comment.

Spanish banks have been pushing to keep using deferred tax assets, which were built up during the country’s financial crisis and must be deducted over time from capital ratios under Basel III regulations. The International Monetary Fund has recommended steps to allow Spanish banks, which have about 50 billion euros of the assets, to use them to improve the quality of their capital by converting them into transferable tax claims.

Deferred tax assets arise from carrying over losses and may be used to reduce future tax expenses. El Pais newspaper reported today that Spain would allow banks to count from 25 billion euros to 30 billion euros of deferred tax assets as capital.

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