Spanish banks 'hold most bad loans in 18 years'

19 April 2012

Bad loans held by banks in Spain increased to their highest level for nearly 18 years in February, new data has revealed.

Figures published by the Bank of Spain have shown that such lending now makes up a total of 8.2 per cent of financiers' credit portfolios.

This represents the biggest proportion of balance sheets taken up by these arrangements since October 1994 and has further heightened fears in the markets that the country's banking sector is on the brink of collapse.

Indeed, this trend appears set to continue in the near future as the statistics showed that non-performing loans went up by €3.8 billion ($4.9 billion) from January over the course of the month to a total of €143.8 billion.

As such, Spanish lenders are facing yet more loan defaults in the coming months as the nation's economic crisis continues to run deeper.

This comes after Carsten Brzeski, senior economist at ING in Brussels, told Reuters that banks in Spain are likely to need a bailout sooner rather than later.

By Asim Shah

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