ECB loans to Spanish banks hit new record in May

14th June 2012, Comments 0 comments

Spain's ailing banks boosted borrowing from the European Central Bank to a new record in May, official data showed Thursday, as they took advantage of emergency cheap loans.

Borrowing surged to 287.8 billion euros ($360.6 billion) from 263.5 billion euros in April for the fifth consecutive monthly record, Bank of Spain figures showed.

The ECB pumped more than 1.0 trillion euros ($1.3 trillion) in cheap loans into the European banking system in two operations in December and February, seeking to avert a dangerous credit squeeze.

Spanish banks have found it hard to borrow money from banks in other eurozone countries because many in Spain are heavily exposed to the real-estate sector, which has been in a slump since a bubble burst in 2008.

Madrid agreed Saturday a 100 billion euros ($125 billion) bailout for its stricken banking sector but after an initial positive reaction, markets turned sharply, pushing Spain's borrowing costs above the 6.0 percent danger line.

© 2012 AFP

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