Spain's bad loans hit 10.7 percent

Spain's bad loan ratio hits record 10.7%

Spanish banks' bad loans surged to a new record level in September
with more than one in ten classed as high risk, the central bank said
Monday.

The level of loans considered at high risk of not being repaid --
mostly real estate credits -- reached 10.7 percent of total loans, the
highest level since the records began in 1962, the bank said in a
report.

The total value of these loans was 182.2 billion euros ($233 billion)
in September, the bank said.

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.

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.

In August the ratio had reached 10.52 percent, according to revised
figures in Monday's report.

A surge in unemployment in Spain, where one in four workers is now
jobless, has driven a wave of evictions of defaulting
mortgage-holders.

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.

Culled from france24.com