the shares of the bank to which it transferred its financial business in exchange for the shareholding. the goal of making the savings banks more professional is to reduce the maximum weight of public - sector stakeholders and to establish a regime regulating incompatibility. once it had completed this legal reform, spain announced ahead of other european countries that it was going to stress - test its banking system to show that the market ’ s perception of bank solvency was clearly lower than it actually was. other european partners joined this initiative and by end - july 2010, the results of the stress tests had been published. as you are aware, compared with our european partners, the spanish stress tests were far superior in terms of scope and transparency. in spain, the decision was taken to stress - test the whole sector and not only institutions representing 50 % of the sector. furthermore, very extensive and detailed information was published. the stress tests showed that spanish banks as a whole were sound, despite taking into consideration very extreme and highly unlikely scenarios. however, they also served as a channel of communication because a lot of important information was disseminated. at present international markets are once again questioning the reliability of the european stress test exercise. as i mentioned earlier, the banco de espana published bank - by - bank information, not only about the assumptions made, but also about the various portfolios and the funds available to cover hypothetical losses. the banco de espana has recently once again revised the assumptions, parameters and estimates published four months ago and considers that they appropriately describe the current situation of the banking system and its exposures. the markets made a highly positive assessment of this transparency exercise and the banks, which are responsible for providing information to investors, should be the parties most interested in persevering with these market communication efforts. from the approval of the measures to the current situation the functioning of financial markets in the first half of 2010 was complicated considerably by the lack of confidence in the sustainability of public finances. at the height of the tension, the funding markets shut down and, consequently, many european institutions, including spanish ones, resorted increasingly to funding from the eurosystem since borrowers and lenders were no longer directly in contact. as a result of the economic measures approved by the government, the reforms of the banking sector and the publication of the stress tests, this tension eased from july. not only did the interbank market begin to function again, but many institutions were able to place €12 billion of bonds and notes

their wholesale funding. as stated, the loan from the eurosystem has progressively declined and institutions should persevere along these lines. it is vital to remain active in euro interbank markets, to participate in the central counterparty clearing houses and to resort to the primary markets and, insofar as the latter allow them, to extend the average maturities on their funding. but they must also report to investors that business is as normal. the regular supplementary information i referred to in the previous point should include a section that reports on the status of wholesale funding, with a breakdown of instruments, the corresponding collateral and their duration. – third, perseverance in the mergers under way, particularly in the savings bank sector, is vital. the progress to date has been most significant and institutions are meeting the deadlines. but further progress in this connection is needed, and there must be no wavering in the integration plans agreed upon. this phase foresees creating the new institutions and setting out the terms of their governance. entities that integrate through “ institutional protection systems ” should have the attendant banks set up before the end of the year, with their boards of directors appointed and their managerial line perfectly defined. achieving this, and the fact that, from january, the new institutions arising from integration processes will be operational, rolling over wholesale funding and negotiating on the markets on behalf and on account of the newly created groups, will lend consistency and reliability to the reform. thereafter, a more technical and silent phase will begin, involving it and operational adaptation, the elimination of redundant structures and staff adjustments which, as in all mergers, will take months. i am convinced that banks will tackle this process as professionally as they are completing the current phase. – fourth and finally, cost structures must be speedily and thoroughly revised. in a monetary union, a country must compete in real terms abroad, as must financial intermediaries with one another, as a devaluation entailing an exogenous competitiveness shock is not an option. to overcome the crisis, reduce unemployment and improve the future outlook for the profitability of banking assets, there is no mechanism available other than to raise productivity and efficiency, to reduce labour and structural costs, and, consequently, to lower margins and prices so that all sectors, including banking, may offer better services within the country and sell more abroad. in the coming quarters, banks ’ and savings banks ’ profit and loss accounts will be subject to different factors of pressure. on