Tuesday, September 20, 2011

Sharp rise in bad loans of banks in Spain

Decidedly, things keep getting worse in Spain, while the Madrid Stock Exchange barely see the green, data published Monday by the Bank of Spain indicate that bad debts are Spanish banks amounted to 3.1 billion euros in July, reaching a total of 124.7 billion euros. Note also that the ratio of NPLs to total loans granted by the Spanish financial sector amounted to 6.94% in July, corresponding to a level not seen since February 1995. Induced by such a situation of rising unemployment and increasing household debt.

Recall in this connection that the mortgage-up over 70% of household debt. However, this often forgotten by the media to tell you is that almost 85% of Spanish mortgages in 2001 consisted of floating rate loans. Note that in other countries such as France and Germany, less than 20% of loans to the same period are of this type. A context that makes the Spanish market particularly sensitive to changes in interest rates from the European Central Bank ....

Let us recall that in Spain, the Euribor ((interbank lending rate in the euro area) in one year is the index most used to index the interest rate. Finally, 93.2% of families in debt for real estate purchases on the other side of the Pyrenees are at variable rates.