Bank in Spain Suffered Setback over Bad Loans

Bank in Spain Suffered Setback over Bad Loans

There seems to have an increase in the total lending at Spanish banks in the month of September. This happened because most of the borrowers failed to pay their loan payments along with an unemployment rate at 26%.

The latest budget report states an increase in lending of non-performing loans to about 12.7% from 12.1% in August. The Bank of Spain said that this rate was 10.7% the previous year. Because the 6.9 billion Euros in loans were classified by default, the stock of bad loans raised to about 187.8 billion Euros.

There seems to have some positive signs in the economy of banks after a slump of five years. But, the Banks in Spain is still facing difficulties in controlling the quality of their assets. It has been predicted by the International Monetary Fund that an unemployment rate will not fall below 25% by the end of 2018.

The assets are being reviewed by the bank of Spain to ensure refinancing of loans. These assets are also being reviewed with a motive that there may be little chances of repayment of loans. The official data revealed that a major setback has been suffered by the banks in Spain because of their bad loans in September.

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