Spanish banks' bad loans hit new record

19 December 2012

Bad loans held by Spanish banks hit a new record high in October as the eurozone debt crisis rumbled on.

New figures published by the Bank of Spain yesterday (18 December) revealed that the amount of money held in loans in arrears by the country's financiers rose to €189.6 billion ($251 billion) during the month, Reuters reports.

This represents a hike of €7.4 billion on the figure posted one month previously and means the proportion of banks' lending arrangements that can now be classified as toxic is up to 11.2 per cent from 10.7 per cent.

Analysts believe this offers proof that the Spanish banking industry is continuing to struggle, even though the European Union has injected a multi-billion euro aid package into the sector.

Daniel Pingarron of IG Markets told Reuters such figures are likely to have a negative impact on the nation's already-troubled jobs market.

"We will see an impact from new unemployed people from the public sector," he warned.

By Claire Archer

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