…consider the grim fact that even €100 billion may not be enough to put Spain’s banks back on their feet, as they could easily face losses of perhaps three times that amount: Real-estate loans amount to €298 billion, construction credit to €98 billion, mortgages to €656 billion and other loans for families and firms to €683 billion. Assuming a 50% loss in real-estate and construction loans, a 5% loss in mortgages and 10% loss in other credits to the national private sector, brings us quickly to the worrying figure of €300 billion in losses. And don’t forget the banks’ additional exposure of €78 billion to Portugal and €10 billion to Greece and Ireland, which could add losses of between €40 billion or more to our calculation.
Spanish banks currently report total equity of €377 billion, so losses on this scale would leave them with just €50 billion to €70 billion remaining in equity. To bring them back to reasonably levels of capital would then require €150 billion to €170 billion—well above the €100 billion line of credit… ['Bail-in' Spain's banks, not bailout. Juan Ramón Rallo. Wall Street Journal. June 18 2012]
No wonder yields on Spanish sovereign debt are going up, regardless of Greece.