Bad loans rise at Spanish banks in April

18th June 2013, Comments 0 comments

The weight of bad loans held by Spain's banks grew in April, the Bank of Spain said Tuesday, a sign of the difficulties facing the bailed-out banking sector.

Doubtful loans rose to 167.1 billion euros ($222.9 billion) or 10.87 percent of all loans in April from 162.3 billion euros or 10.47 percent of all credits in March, the bank said.

Bad loans began to rise at all Spanish banks after the collapse of a decade-long property boom in 2008. The bad loan ratio reached a record high of 11.23 percent of all credits in November 2012.

Last year, the eurozone agreed to finance a rescue of Spain's banks, swamped in bad loans since a property bubble imploded in 2008 with broad and devastating economic consequences.

Spain has so far withdrawn 41.3 billion euros from the eurozone rescue loan to recapitalise its banks.

As a condition of the eurozone rescue, Spain set up Sareb, a "bad bank" charged with mopping up bad assets at a discount and then attempting to sell them for a profit.

As banks transferred toxic assets to Sareb, the level of bad loans at Spanish banks dipped -- but the impact proved to be temporary.

In December last year the burden of bad loans fell for the first time in 17 months as four rescued banks -- Bankia, CatalunyaCaixa, NovaCaixaGalicia and Banco de Valencia -- offloaded troubled assets to Sareb.

But the ratio rose again in January.

Once again, the weight of bad loans fell in February following toxic asset transfers to Sareb by four Spanish banks -- Liberbank, Caja3, BancoMareNostrum and CEISS -- before resuming its upward climb in March.

© 2013 AFP

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