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Banesto's profit slumps on bad loans

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Banesto's profit slumps on bad loans
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Spanish high street bank Banesto’s net profit tumbled nearly 20 percent last year, which was worse than analysts had forecast.

Spain’s economic woes meant more loans were not repaid and its income suffered as it had to pay higher interest for savings accounts to compete with other banks.

While relatively small, Banesto is closely watched as the first European bank to report earnings and its results showed a worsening climate for Spain’s lenders.

Banesto’s total loans to the property and construction sector stood at 10.35 billion euros in 2010, around 13 percent of its loan book. Of this, 1.67 billion was non-performing and 1.08 billion was potentially non-performing, the bank said.

Banesto, is 88 percent owned by Santander, and there’s been speculation it could be folded into Santander, but chairman Antonio Basagiotti, said Banesto would remain independent.