Spanish banks further battered by bad real-estate loans

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: SContreras@Euromoney.com

By:
Euromoney Skew
Published on:

New government says €50 billion additional provisioning required

Luis de Guindos, Spain’s new minister for competitiveness and the economy, has told the Financial Times that Spain’s banks will need to provision an additional €50 billion against their bad real-estate assets.

This will come as little surprise to those in the market, as hidden losses of this magnitude have long been assumed, having been identified in June in a report, published by The Boston Consulting Group. De Guindos is, however, surprisingly cavalier about Spain’s real-estate problems, stating:



“This is not Ireland. It’s a completely different order of magnitude. We have a property problem in Spain, but it’s manageable.”



Hmmm – €176 billion of bad loans on dodgy real estate will take quite a lot of managing. He caveats:




“It’s manageable for institutions with a new round of consolidation...because remember that for Santander, the big banks, it’s obviously doable, but it’s not distributed evenly [among the different banks] – so you need an extra round of consolidation ...”



You can say that again.
 
For more on how Spain’s banking sector is attempting to deal with its problem real-estate loans, see 'Property crisis drains Spain’s hopes of recovery' in the December issue ofEuromoney magazine.

- Euromoney Skew Blog