Spanish Banks Bad Loans Rose 9.42% in June

Spanish banks’ bad loans rose to a record high in June as assets tied to the country’s deflating property market soured further, keeping the financial sector at the forefront of investor concerns about the country’s fragile economy.

In the same month that Spain sought a European bailout of up to 100 billion euros for its struggling lenders, their non-performing loans rose to 9.42 percent of outstanding portfolios from 8.95 percent in May, central bank data showed on Friday.

Loans that fell into arrears increased by 8.4 billion euros ($1.03 billion) to 164.4 billion euros.

Bad loan rates have risen steadily since a decade-long property boom ended four years ago, with the country now in its second recession since 2009 and one in four Spaniards out of work.

They could rise further in coming months should an economic recovery fail to materialize, as many banks have refinanced debt owed by struggling companies to prevent them going bust.

Provisions on loan losses and writedowns on real estate assets drove many Spanish banks’ profits down sharply in the first half of the year.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza