Spanish bank bad debts hit record in August

Woman uses automated teller machine (ATM) outside branch of Bankia in Madrid Spain's banks reported Friday record high bad loans in August, revealing persistent balance-sheet weakness despite a eurozone-funded bailout. Bad loans rose from the previous month by 2.0 billion euros ($2.7 billion), or 1.13 percent, to an unprecedented 180.7 billion euros ($247 billion).
That represented 12.12 percent of all credit extended by Spain's banks, up from 11.97 percent in the previous month.
Bad loans in Spain, mostly linked to the collapsed property sector, have now hit a record high for three straight months.
Last year, the eurozone agreed to finance a rescue of Spain's banks, swamped in bad loans since a property bubble imploded in 2008 plunging the country into a recession.
Spain, the eurozone's fourth-largest economy, has so far withdrawn 41.3 billion euros from the eurozone rescue loan.
EU officials last month hailed the strengthening of Spain's banking sector since the rescue but warned that a drop in lending and high debt levels posed a risk.
Spanish banks were regaining access to funding on the markets and their deposits have been rising, the European Commission and the European Central Bank said in a report.
But the report also warned that bank profits could take a hit as the Spanish government and private sectors tried to lower debt and as the property sector sank further.
Source: AFP