Spanish Banking Sector Non-performing Loans Reach Record in September

It’s the highest level since the central bank began compiling that data more than 50 years ago: the ratio of non-performing loans to total outstanding loans held by Spanish banks rose to 12.68 percent in September.

There are several reasons for the bad piece of news: first, the country’s economic situation and with 27% unemployment rate. Also, stricter regulations of banks to ensure proper classification of their loan portfolios.

The total loan portfolio held by all of Spain’s financial entities fell in September to 1.28 trillion euros (nearly $2 trillion), down from 1.49 trillion euros in August, the Bank of Spain said.

Nearly 800,000 home sales took place in 2007, the peak of a decade-long real estate boom that made Spain’s economy the envy of other European nations, EFE agency reported.

The bursting of the bubble combined with the 2008 global financial crisis to leave Spain mired in a deep economic crisis and struggling with a sky-high jobless rate, which stood at 25.98 percent at the end of this year’s third quarter.