Spanish banks report decline in bad loans

18th May 2011, Comments 0 comments

Spanish banks reported a fall in the proportion of bad loans on their books in March, ending a five-month run of increases, the Bank of Spain said on Wednesday.

Doubtful loans, which might not be recovered, amounted to 111.51 billion euros ($158 billion), or 6.11 percent of total assets, in March, down from 6.19 percent in February, the central bank said.

Bad loans represented 4.98 percent of total assets in October 2009 but they have piled higher since then as Spanish banks felt the impact of the collapse of the property bubble in 2008.

Under government regulations announced in March, Spain's listed banks are obliged to raise the proportion of rock-solid core capital they hold to 8.0 percent of total assets from six percent previously.

Banks not listed on the stock exchange must keep a core capital ratio of 10 percent.

Moody's downgraded Spain's credit rating by one notch to "Aa2" in March and warned it may do so again on fears the government will be unable to meet its targets of slashing the public deficit and on concerns over the cost of restructuring the banking sector.

© 2011 AFP

0 Comments To This Article