Worst not over for spain banks after big writedowns

Signs sit outside a Banco Bilbao Vizcaya Argentaria SA (BBVA) bank branch in Madrid, Spain. Angel Navarrete | Bloomberg via Getty Images Spain's largest banks have reported dismal

results over the past 24 hours, hit by toxic real estate assets, and according to analysts, the results highlight the desperate need for Spain's banks to raise more capital. "The

problems for Spanish banking are far from over," Ashok Shah, chief investment officer at wealth management firm London & Capital, told CNBC on Friday. "The underlying REAL

ESTATE MARKET is only half-corrected,so when it fully corrects over the next year of two, the are going to keep spiking up which will keep eating into the tier-one capital so the need to

raise more equity is going to be enormous and very, very pressing indeed." BBVA reported that profits fell 44 percent in 2012 as it made 9.5 billion euros($13 billion) in provisions on

bad real estate loans from the 2008 Spanish property crash. The gloomy picture continued elsewhere as CAIXABANK reported that profits tumbled nearly 80 percent last year to 229 million euros

($311 million) as provisions doubled during 2012 to over 12 billion euros ($16.4 billion). reported its biggest ever net loss of 2.46 billion ($3.36 billion) euros in 2012, compared to a

forecast of 2.38 billion euros made by analysts polled by Reuters. The news followed Thursday's earning miss from BANCO SANTANDER which showed that the bank's NET PROFITS HAD MORE

THAN HALVED as it put aside almost 19 billion euros ($26 billion) for non-performing loans and property assets. On January 1, Spain's Central Bank revised solvency rules and set a new

core capital-ratio target for Spanish banks of 9 percent. It also said that it will require a quarterly breakdown of what Spanish banks are including as core capital. New regulations from

the Basel Committee on banking regulations have also called for more stringent minimum capital levels, so banks maintain sufficient assets to face future financial crises. (_Read More_: WHY

NEW BASEL RULES WON'T MAKE SAFER BANKS) Chris Wheeler, bank analyst at Mediobanca, told CNBC that Santander would be forced to "sell more businesses" in its attempt to raise

more capital. "One of the issues we're concerned about with Santander is that we think they have an issue with capital at the parent group level. They look perfectly

well-capitalized but a lot of that capital is sitting in Mexico or Brazil, it's not actually sitting in Spain," he said. Spain received 37 billion euros ($46 billion) from the euro

zone to recapitalize four of its struggling banks in 2012. As part of a of the Spanish banking sector, lenders were forced to transfer billions of dollars' worth of toxic real estate

assets to a so-called "BAD BANK" at steeply discounted prices. The average write down on the banks' property loans was 45.6 percent and 63.1 percent on foreclosed properties.

SPAIN'S BANKS NOT ALONE Spanish banks aren't the only ones to suffer impairment charges. French bank CREDIT AGRICOLE warned on Friday that its latest earnings would be hit by 3.8

billion euros in writedowns. It said that the charges reflected the tighter regulatory environment. Dutch banking insurance group SNS REAAL is being nationalized at a cost of 3.7 billion

euros to the state. (_Read More_: DUTCH BANK SNS REAAL NATIONALIZED AT COST OF $5 BILLION) Investors have snapped up bank shares since late last year, spurring a major rally for financials.

"If we look at the share prices we see how strong the bank sector has been and that tells you that there is a degree of confidence in the market, [but] what state the balance sheets are

really in,is the big question," Wheeler said.