Spanish banking issues 'clouding global recovery'

24 April 2012

Problems in the Spanish banking system need to be dealt with urgently by policymakers across Europe, a leading official has stated.

Anders Borg, Sweden's finance minister, believes the issues faced by financiers in the embattled Iberian nation at present are so severe that they are threatening the entire global recovery.

Speaking yesterday (23 April) at the Peterson Institute for International Economics in Washington DC, Mr Borg explained that a failure to recapitalize Spanish banks sooner rather than later could force the country's government into a situation where it has no choice but to seek a bailout.

The expert went on to say that solvent banks in Spain must solidify their core capital, while their struggling counterparts must resolve their issues.

Mr Borg stated this should be done as quickly as possible, as the "uncertainty we are now seeing in the stock market and in the world economy" is partially caused by the "banking cloud hanging over the recovery".

Last week, it emerged that bad loans held by Spanish banks had risen to their highest level - 8.2 per cent of credit portfolios - for nearly 18 years.

By Asim Shah

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