Spain banking woes mount as bad loans soar

The level of bad debt in Spanish banks has surged to a new record as more than one in nine loans is likely to not being repaid. The rise in doubtful loans might raise the EU rescue bill for the Spanish banking sector. The level of non-performing loans in Spanish banks rose by 2 billion euros ($2.6 billion) from October to November last year to reach a total of 191 billion euros, the Bank of Spain said Friday, as it released latest available banking data. Bad debt levels in that month amounted to 11.3 percent of total loans, the central bank said, as they edged up from 11.2 percent in October to reach the highest level ever since banking records were first taken in Spain in 1962. The bank attributed the rise to Spain's record unemployment which reached 25 percent at the end of 2012, leaving a rising number of individuals and companies unable to repay their debts. The new debt record seems set to aggravate the crisis in the country's banking sector, which is laboring under a mountain of debt as a result of a crash in the property market in 2008. In June 2012, Spain secured rescue loans from the European Union to the tune of 100 billion euros to shore up its ailing banks. Some 37 billion euros already went to the four hardest-hit banks which were nationalized in the wake of the government bailouts. Experts believe more debt going bad is likely to bring down additional Spanish banks as they are estimated to be sitting on more than 100 billion euros in risky mortgages.