Spain bad loans hit record high

City A.M. Reporter
SPANISH banks’ bad loans as a percentage of total lending rose to 12.7 per cent in September from 12.1 per cent in August – a new high, Bank of Spain data showed yesterday.

The ratio has been steadily climbing as households and small companies struggle with debts and as banks, fighting to improve their own capital quality ahead of new stress tests, rein in lending.

Spain’s economy emerged from a two-year recession in the third quarter, although many analysts and bankers forecast that bad loans will not peak until 2014.

Bad debts rose by €6.9bn (£5.8bn) to €187.8bn in September, while total credit fell by €8.9bn to €1.5 trillion, the data showed.