Spanish banks report record bad loans in June

19th August 2013, Comments 0 comments

The level of bad loans weighing on Spain's banks hit a new record in June, official figures showed Monday, a sign of persistent weakness in the bailed-out sector.

Doubtful loans rose to 176.42 billion euros ($235.14 billion), or 11.61 percent of total loans, some six billion euros more than in May, the Bank of Spain said.

The June figure topped a previous record high ratio recorded for November 2012, which was 11.37 percent, according to adjusted figures from the bank.

Last year, the euro zone agreed to finance a rescue of Spain's banks, swamped in bad loans since a property bubble imploded in 2008 plunging the country into a double-dip recession.

Spain, the euro zone's fourth-largest economy, has so far withdrawn 41.3 billion euros from the euro zone rescue loan.

As a condition of the rescue, Spain set up Sareb, a "bad bank", to buy bad assets from lenders and sell them for a profit.

Spanish banks' bad loans ratio fell in December 2012 for the first time in 17 months as banks began offloading troubled assets to Sareb, but it has since risen again.

Concern for Spain's finances has eased since mid-2012 when speculation peaked that it would need a full sovereign bailout, and its borrowing costs on financial markets have fallen.

But the International Monetary Fund warned in a report last month that Spain's financial sector still faces "elevated" risks and further financial tightening was needed.

Spain has been in its current recession since mid-2011. The unemployment rate is above 26 percent.


© 2013 AFP

0 Comments To This Article