JOSE IGNACIO GOIRIGOLZARRI is quite emphatic about it – Spain’s banking problems are very different from Ireland’s; in fact he maintains that they are not nearly as bad.

Both countries experienced a property bubble driven by cheap and easy access to funding, a large proportion of which came from banks in the core European countries, and a voracious appetite to take on risk.

In Spain’s case, the savings banks owned by regional governments fuelled spectacular lending splurges where little attention was paid to the concentration of risk in certain areas, particularly along the tourist regions of the Mediterranean coast.

While the two countries have struggled to deal with bad real estate debts, Spain doesn’t have the same level of development and commercial property loans as Ireland, said Goirigolzarri, speaking ahead of the results of independent stress tests of the Spanish banks.

“There are many similarities but there are many things which are completely different. There was a real estate bubble in both countries, but in Ireland you are talking about wholesale real estate; here you are talking about retail real estate,” he said.

“Bankia has a problem not with wholesale real estate, but with flats [apartments] and mortgages distributed by our branch network. Here you don’t have big wholesale deals. The situation is completely different and the solution is very different.

Bankia has about 46,000 foreclosed apartments on its books, which must be resolved by the country’s planned bad bank, the details of which have yet to be announced.

The view of the Spanish authorities is that there should not be a clear divide between the banks and the country’s bad bank but a close relationship as the lenders are best placed to “commercialise” those bad assets and sell them as the banks still hold the purse-strings.

There are roughly €1.8 trillion of Spanish loans in the country’s banking system, according to Daragh Quinn, an analyst at Nomura who is originally from Dublin but has been living in Madrid for 12 years. About €690 billion of these loans relate to mortgages and a further €300 billion to commercial property loans, including development loans.

The bulk of mortgages are prime loans, given that buy-to-let lending was rare in the Spanish market, said Quinn. As a result, the level of non-performing mortgages has remained at around 3.5 per cent – about a quarter of the level in Ireland.

While Ireland struggled to deal with an exposure of about €100 billion of commercial property loans with an economic output of €150 billion, Spain’s €1 trillion economy has a greater capacity to deal with the most toxic of the country’s loans, the €300 billion of commercial property loans.

Today’s stress tests are expected to set the capital shortfall at the Spanish banks at €60 billion, which amounts to about 6 per cent of Spanish GDP; this compares with about 40 per cent for Ireland’s €64 billion of bank bailouts.

Two weeks after taking over as executive chairman of Bankia, Goirigolzarri, a former second-in-command at Spain’s second biggest bank, BBVA, said the lender, an amalgam of seven struggling savings banks led by Caja Madrid, required €19 billion on top of an earlier $4.5 billion bailout.

Goirigolzarri maintains that Bankia did not trigger the problems in the Spanish banking system but recognised losses that were not acknowledged earlier as a result of property prices falling by about 25 per cent, a three-year-old recession and the highest unemployment rate in the euro zone.

“That was the tip of the iceberg. I think that Bankia is a systemic – it has 10 per cent of market share. Consequently, what happens to Bankia is absolutely key for what is going to happen to the banking system,” he said.

Spain attempted an initial clean-up of its banking sector over the past two years by consolidating 45 of the country’s cajas or regional savings banks into 10, but this wasn’t enough.

“The consolidation process was necessary in this country and it is going to carry on . . . [but] you can’t consolidate if you don’t have capital and secondly, you must have a very professional team and a very clear organisational challenge,” said Goirigolzarri.

Yet while Spain has already announced a plan to set up a bad bank under the government’s bank bailout vehicle, Frob, no details have yet been agreed on the difficult mechanism of how to value the loans, a process that was so slow in Ireland it was one of the main reasons for Ireland’s bailout.

Nor has Bankia received any of the promised €19 billion from the euro bailout funds, despite the agreement among euro leaders in June to separate state and banking debt for Spain and Ireland by agreeing to recapitalise banks in those countries directly.

Tuesday’s joint statement from the finance ministers of Germany, Finland and The Netherlands, however, saying that “legacy” bank debts should be dealt with by national countries, not by the centralised euro zone funds, threatens to derail the June plan.

“I don’t see a sort of confrontation between Europe and Spain,” said Goirigolzarri. “We all have the same objective and that is to agree on a solution that is good for everybody.”