Spain lenders’ bad loans hit 17-year high: Bank
The level of Spanish banks' bad loans hit a new 17-year high in November, a fresh sign of weakness in the country's battered financial sector, official figures showed on Wednesday.
The value of the bad assets — mostly real estate loans that were gutted by the bursting of a construction bubble in 2008 — reached 134.1 billion euros ($172 billion) or about 7.5 percent of total banking assets, the central bank said.
This was the highest figure since 1994 and higher than the 7.4 percent figure reached in October and 7.2 percent in September. It has more than doubled from 3.37 percent at the time of the collapse in late 2008.
Spain’s banks are a major source of concern for financial markets which fear the debt crisis that sank Greece and has snagged Italy could spread there. Economists warn that Spain is heading into recession this year.
Right-leaning Prime Minister Mariano Rajoy took office last month promising to further reform the banking sector which has been undergoing a major restructuring since the global financial crisis from 2008.
His government has warned that Spanish banks will have to make provisions worth 50 billion euros this year to cover losses on bad property-related assets.
Figures published by the housing ministry on Tuesday showed that house prices fell by 6.8 percent in 2011, the sharpest annual fall since the crisis erupted in 2008.