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Spanish Banks' Bad Loans At 18-Year High

Spain's bad loans reached an 18-year high in February, data from the Bank of Spain showed Wednesday.

About 8.16 percent of loans held by banks in February were non-performing, the highest since October 1994. In January, only 7.9 percent of total debt was non-performing.

The amount of doubtful debt rose to EUR 143.8 billion, up EUR 3.8 billion from January.

The current doubtful loan data have been suppressed by Spanish banks camouflaging the true deterioration of their loan portfolio to construction and property sectors by undertaking debt for assets swaps, IHS Global Insight economist Raj Badiani said in a note.

The economist said bad loans will rise steadily throughout 2012 and could spill into 2013, with construction companies and property developers facing accelerating house price falls alongside a stock of around one million unsold new properties.

by RTT Staff Writer

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