[QODLink]
Europe

Spain's bad loan ratio hits record

The central bank says level of loans considered at high risk of not being repaid reached 10.7 per cent of total loans.
Last Modified: 19 Nov 2012 11:47
The level of Spanish banks' bad loans has risen steadily over recent months [EPA]

Spanish banks' bad loans have surged to a new record level in September with more than one in ten classed as high risk.

In a report released on Monday, th Bank of Spain said the amount of unpaid loans had climbed to the record level of 182 billion euros (231 billion dollars) or 10.7 per cent of total debt, up from 10.5 per cent in August. Year-on-year, the increase was 42 per cent.

Spanish banks have been weighed down with rising bad loans and repossessed real estate since the collapse of a property bubble in 2008, which has caused defaults by builders and mortgage holders to soar.

Spain's unemployment rate has risen to 25 per cent, leaving a growing number of individuals and companies unable to repay their debts.

A surge in unemployment has also driven a wave of evictions of defaulting mortgage-holders.

The level of Spanish banks' bad loans, a major concern for financial markets as an indicator of the country's financial health, has risen steadily over recent months.

The conservative government last week announced a two-year halt to evictions of the most desperate homeowners following an outcry over suicides linked to evictions.

Eurozone authorities agreed in June to extend a rescue loan of up to 100 billion euros to aid ailing Spanish banks.

An audit by US consultancy Oliver Wyman concluded that Spanish banks overall needed to raise up to 59.3 billion euros of extra capital, or 53.7 billion euros after adjusting for the effect of certain mergers and fiscal procedures.

But the government has said it believes it will need to ask for a lower amount, about 40 billion euros, from the bailout fund, since some of the banks could raise capital themselves.

In August Spain approved the creation of a so-called "bad bank" to buy troubled property assets and bad loans from lenders in a bid to clean up the financial sector and restore investor confidence in the economy.

320

Source:
Agencies
Topics in this article
People
Country
Featured on Al Jazeera
At least 25 tax collectors have been killed since 2012 in Mogadishu, a city awash in weapons and abject poverty.
Tokyo government claims its homeless population has hit a record low, but analysts - and the homeless - beg to differ.
3D printers can cheaply construct homes and could soon be deployed to help victims of catastrophe rebuild their lives.
Lack of child protection laws means abandoned and orphaned kids rely heavily on the care of strangers.
Featured
Booming global trade in 50-million-year-old amber stones is lucrative, controversial, and extremely dangerous.
Legendary Native-American High Bird was trained in ancient warrior traditions, which he employed in World War II.
Hounded opposition figure says he's hoping for the best at sodomy appeal but prepared to return to prison.
Fears of rising Islamophobia and racial profiling after two soldiers killed in separate incidents.
Group's culture of summary justice is back in Northern Ireland's spotlight after new sexual assault accusations.