Spanish Banks' Bad Loans Hit Record High

[Sancho Panza]

Yahoo/AFP 17/1/14

'Spanish banks reported Friday record-high bad loans, with more than one in eight rated as doubtful in November even as the financial sector prepared to exit a 41-billion-euro ($56 billion) bailout.Spanish banks are still burdened by bad loans made during a decade-long property bubble that burst in 2008, tipping the nation into recession and throwing millions out of work.

Despite shoring up their balance sheets with a 41.3-billion-euro rescue loan from Spain's eurozone partners, the banks' bad-loan levels have broken new records month after month.

Doubtful loans -- those at risk of not being repaid -- rose in November to 13.08 percent of all credit extended by Spanish banks, up from 12.99 percent the previous month, a Bank of Spain report showed.

It was the highest bad-loan ratio since records began in their existing form in 1962.

The bad loans in November amounted to 192.5 billion euros, up from 191.0 billion euros in October.

Spain, the euro zone's fourth-biggest economy, is set to exit the financial sector rescue programme on January 23.

Under the programme, Spanish banks have transferred many of their dodgy assets to a "bad bank", called Sareb, which aims to pool the bad assets and sell them at a discount.'

Reuters 16/1/14

'Jan 16 (Reuters) - Spain sold more debt than planned at a triple bond auction on Thursday, taking advantage of falling borrowing costs and sustained investor appetite for its debt as a tentative economic recovery gathered pace.

The Treasury started to front-load its annual issuance programme by selling 5.92 billions euros of bonds due in 2017, 2026 and 2028, above the target range of 4.5 to 5.5 billion euros.

Demand for the mid- and long-term paper, albeit strong, was lower than at the most recent auctions while yields fell on the 2017 and 2026 bonds but were slightly up on the 2028 one.

Spanish debt has been supported since mid-2012 by a European Central Bank pledge to defend the euro, consistently low returns on higher-ranked debt and signs in recent weeks that the country's economy is turning the corner.'