Spain’s banks dealt dose of loan reality

“Why did the country’s mortgage delinquency rate rise so slowly even as unemployment soared above 26%?” wonders The Wall Street Journal. Following the introduction of “more stringent disclosure guidelines from Spanish banking authorities,” the answer to this question is becoming clear. The daily explains that —

… lenders had been making their loan books look healthier than they really were by refinancing loans to struggling homeowners and businesses.

Now that the new rules have been established, the business daily remarks that “mortgage delinquency is rising fast,” and weighing on Spanish banking stocks. However, —

The hit, though large, is manageable for Spain’s banks. But it will drag on profits this year and likely next year, said Santiago López, an analyst with Exane BNP Paribas.

Read the article at Presseurope here.

Read the original article at The Wall Street Journal here.