Delinquent Loans in Spanish Bank Portfolios Break Records in June (Charts)

According to the Bank of Spain, delinquent loans (3-months+) in Spanish bank portfolios hit a new record high of €164.361 billion in June, which has been the trend for years now. But to prove that Spain's financial system is officially in uncharted territory, the loan delinquency ratio hit a record high of 9.42% in June (164.3B/1,743.9B of loans outstanding), a level not seen since February 1994 when it peaked at 9.15% (h/t P&I; view historical data here). Charts on my previous post on Spain's economy explain why loan delinquencies are at record highs.

Source: Bank of Spain (.cvs file)@dvolatility on Google Docs

So get ready for bank bailouts.

"The Spanish government is preparing a series of banking-sector reforms required under the terms of the aid package. At its Aug. 24 cabinet meeting, it will present a revamp of Spain's Fund for Orderly Bank Restructuring, known as the FROB, to give it more powers to seize ailing institutions. It will also unveil the framework of a so-called bad bank to purchase toxic real-estate assets from local banks and hold them until buyers can be found." (WSJ)

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