Spain’s bad bank loans rise

The number of bad loans held by Spanish banks continues to rise.

In May those so-called non-performing loans, which are unlikely to ever be repaid, now account for 8.95 percent of what the banks have on their books, up from 8.72 percent a month earlier.

The latest total is the highest since April 1994.

Such loans have risen steadily since a decade-long property boom ended four years ago.

The figures were released by Spain’s central bank.

Its new governor, Luis Maria Linde, has now reversed the previous policy of propping up lenders and said those that are too weak to survive on their own face closure.

“If a bank is not strong enough, it will have to face an orderly process of resolution or liquidation as we have already done with four savings banks during this crisis – Caja Castilla La Mancha, Caja Sur, Caja de Ahorros del Mediterráneo and Unnim,” Linde said.

At the same time the central bank said bank customers continue to take their money out of their accounts.

In May total deposits shrank by 5.75 percent from a year earlier. However the rate of withdrawals was not as massive as it was in March and April when it hit the fastest since records began in 1990.

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