BAD bank loans reached a record high in June as the Spanish economy remained mired in recession, according to Bank of Spain data.
Bad debt, mainly in the form of defaulting property loans, now accounts for 11.4% of the country´s total credit; an increase of 0.4% from May and the highest level since November 2012.
There was a slight drop in the bad debt ratio at the end of last year following the launch of the so called “bad bank” which is to swallow up large amounts of toxic real estate that had brought down several Spanish banks.
The institution takes on building plots and unfinished developments, and is expected to sell the stock at a profit within the next 15 years.
Loans and arrears rose once again at the start of the year, however, dampening Spanish bank earnings in the first half of the year, although a number have reported a slow down in the rate of increase in the second quarter.
Despite the news, many economists do believe the country is over the worst and could return to growth later this year.
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