Banesto hit by high provisions

SPANISH retail bank Banesto reported a 25 per cent drop in first-half net profit yesterday, hurt by high funding costs and provisions against bad loans.

The decline in profit was less than expected, but Banesto’s shares plunged in line with other Spanish banks amid growing fears of a spreading Eurozone debt crisis. “It’s total panic in the market and the stock falls are following sovereign risk,” said Nuria Alvarez, analyst at Renta 4.