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Record bad debt plagues Spanish banks

PUBLISHED: August 20, 2013 at 1:22 pm  •  LAST EDITED: August 20, 2013 at 1:22 pm
Business & Finance, National News  •  14 Comments

Record bad debt plagues Spanish banks

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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.

Is the end in sight? Let us know what you think in the comments below.

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August 20th, 2013 1:31 pm

Unemployment to go back up in the autumn, prices rising daily (well round my neck of the woods they are) business’s going under daily, record bad loans. NO! I don’t think the end is in sight…of the economic crisis, THE END may be in sight.


August 21st, 2013 12:23 am

The end is in sight. The end of Spain, that is lol.


August 21st, 2013 9:55 am

Certainly a sad state of affairs. Mr Rajoy should really concentrate on the economy (perhaps hand back some of the millions), and stop concentrating on a deflection of the problem, by sabre rattling at Gibraltar.

Claire Wilson (Reporter)

August 21st, 2013 11:50 am

As a journalist I just report what people are saying, however I have sat in on numerous press briefings in London over the past few months and been told Spain will show signs of recovery by the end of the year, but for all my glass half full wishful thinking I cannot see it happening myself either.

Perhaps I need to ask these economists exactly how they have come to this conclusion; would you be keen to see a piece on this on the site or in the paper?


August 21st, 2013 11:56 am

YES please Claire Wilson, I would love to see more in depth hard hitting articles on any subject. Politicians and economists across Europe have been getting an easy ride over the economic crisis for instance, even Paxman has become a softie when it comes to interviews.


August 21st, 2013 12:24 pm

Yes, I think we would.

Mr Stevens

August 21st, 2013 12:55 pm

Once people see how the uk housing market will pick up from January 1st with the new Government first time buyers scheme, hopefully Spain will follow suit and sell all these empty houses it has to offer and generate some money. I would love to hear more from you later on Claire regarding anything positive on Spain’s horizon. It seems absolutely futile to talk this country down doesn’t it.

Stuart Crawford

August 21st, 2013 12:58 pm

Claire – ask these ‘economists’ if they accurately predicted Spain’s problems BEFORE they happened.

Be prepared for shedloads of b/s. They would like us to believe they are ‘scientific’ – they are’nt it’s all mumbo jumbo. Real shamans are very good at what they do – these economists are not shamans but sham artists desperately trying to justify their very good salaries.

Claire Wilson (Reporter)

August 21st, 2013 2:07 pm

If investor sentiment in the UK is anything to go by the home and European markets are certainly looking more attractive, according to numerous surveys conducted over the past few months. We’ll just have to wait and see whether this renewed optimism does in fact spread to the Spanish real estate market…and if not among the majority whether the contrarians are prepared to place a bet.

I’ll certainly go ahead and probe the economists more deeply. I do think the majority are worth their salt, although I agree some of the benchmarks they use can be questionable, resulting in predictions that are far removed from the reality of the everyday lives of the majority. And of course, there are always bad eggs in every basket!

But we will see…I look forward to presenting you with my findings!

Elaine Dove

August 21st, 2013 2:54 pm

I would be interested to read about any interview you may have with economists Claire?


August 21st, 2013 3:00 pm

Spain got used to massive amounts of money coming into the Country
Huge infrastructure grants from the EU
money from people buying property and the money for Building Licenses paid by developers
money from Tourists

Tourists numbers have held up better than originally thought
but grants from EU are down and money from Building licenses

There is not the ability to make up these revenue streams from other sources esp from within the Country


August 21st, 2013 5:26 pm

Another example of how clueless this Spanish government is, ridiculed around the world for it’s crazy ideas.


Paul H

August 22nd, 2013 1:48 pm

I think like many others all the fantasy talk will come to an end when the German elections are over and we get back to reality once this veil is removed. After all it was only Dragi’s remarks which removed the heat and allowed the interest rates to return to a more manageable level. The southern countries have a lot more pain ahead there has been lots of talk on reforms but in reality little has been done regarding privatisation, labour reform and reduction in the huge unwieldy bureaucracies these countries have, to the slimmed down efficient form which they promised to achieve. It does not give me any pleasure at all to see my Spanish friend suffering real hardship, whilst the government in Madrid make lots of noise but very little action, Spain has a well educated and willing workforce who want some imaginative direction from their masters in Madrid.

luc de waen

August 26th, 2013 7:24 am

Do politicians lie :)? For five years they have tried just about everything, so lying is all that remains…Now comes the big one,, the consumercrisis…wich will have more impact than the bankbubble and housing bubble together…

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