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Spanish banks' bad debts hit $221bn

Bad debt held by Spanish banks hit a new record high in July as the country's economic crisis continues to intensify.

According to official data released by the Bank of Spain, financiers in the struggling Iberian nation now have €170 billion ($221 billion) worth of lending agreements that are in danger of not being paid back.

This represents some 9.86 per cent of the total loans that have been agreed by the organizations - a marked increase on the figure of 9.42 per cent recorded one month previously.

Spain's banks have struggled in recent years due to their heavy exposure to the country's toxic property market and deputy prime minister Soraya Saenz de Santamaria has now admitted the government may now accept international help.

"If we manage to bring those borrowing costs down to acceptable levels and that doesn't imply an intolerable sacrifice for Spaniards, we will have to analyze it," she told Telecinco.

By Claire Archer