Spanish banks are holding their largest amount of bad loans since 1994 as the country's financial prospects continue to deteriorate.
That is according to new figures released by the Bank of Spain, which have revealed financiers in the indebted eurozone member state were maintaining risky lending arrangements worth some €155.8 billion ($191 billion) in May.
In addition, Spanish banks also currently have 8.95 per cent of their total lending deals out in "doubtful" contracts - a markedly higher figure than the 3.37 per cent posted four years ago.
The central institution has attributed this significant upward movement to a combination of the collapse of the nation's property sector and the impact of the ongoing global economic crisis.
This comes after government officials in Madrid recently finalized a bailout package worth around €100 billion with their counterparts from across the eurozone in an attempt to quell the country's economic crisis.
By Tony Aynsley