Chart Of The Day: Spanish Bad Loans Hit New Parabolic Record

Tyler Durden's picture

It just refuses to get any better in Spain, whose banks are now aggressively marking down real estate to something resembling fair value. Last month we reported that Spanish bad loans jumped by the most ever, rising by over 1% to just under 10%. Today, last month's number was revised even higher to 10.1%. But the worst news is that the August bad loan total just hit a fresh record of €178.6 billion, or 10.5% of the total €1,698.7 billion in bank loans. Making things worse is that the primary bank funding lifeline - deposits - continues to flow out. That both Spain, and its banking sector are utterly insolvent, is clear to anyone but Oliver Wyman and those who have bought SPGBs (although granted the latter are merely hoping for a quick flip). And the ECB of course. Indicatively, as a % of GDP, this would be equivalent to roughly $2.7 trillion in US bank loans going sour (for more on the collapse of Spanish banking, and the laughable stress test whose worst case has already become the baseline, read here). The chart summarizing this staggering statistic is below.

As for that other marginal peripheral country, Italy, things aren't any better on ther ground there either.

The Italian banking association ABI said overall deposits and bank bonds had risen 0.57 percent year-on-year in September. Deposits held by Italian residents jumped 4.7 percent while bonds bank sold to retail clients fell 6.8 percent.


The data showed deposits held by foreigners continued to fall, although at a slower pace than in previous month. In August they declined by 15.4 percent compared with a 17 percent fall a month earlier.


Higher overall deposits did not translate in increased bank lending. Loans to non-financial businesses and families fell 2.6 percent, the fifth straight monthly decline and the worst deterioration in at least two years.


Also, bad loans rose due to Italy's recession. In September, they totalled nearly 116 billion euros, up 15.6 percent from a year earlier.

In other news, the European recovery is here. Or something.

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LawsofPhysics's picture

Don't worry, there is a CDS for that...

GetZeeGold's picture



Yeah.....but getting those guys to delare a default is the real bitch.


NotApplicable's picture

Primary bank funding lifeline - The Bernank.

Stackers's picture

with 10-1 fractional banking leverage and 1 in 10 loans going bad I think Spain might have a tiny problem here.

SheepRevolution's picture

10:1 fractional reserve? Try 1000:1....

Stackers's picture

Well its supposed to be 10-1 ....... lol

Possible Impact's picture

Well, when you drill down into the numbers - you will see they were Fracked.

Then you see they utilize horizontal drilling to mine assets from other nearby deposits.


fonzannoon's picture

Ha CNBC snuck this in during a 5 minute rant on how awesome the Spanish bond auction was. I think they had one sentence and it sounded like the teacher from South Park "But bad loans are bad uumkaay" and then quickly moved on...

GetZeeGold's picture



They should have done a story on whoever was stupid enough to buy Spanish bonds.


AnAnonymous's picture

Ha CNBC snuck this in during a 5 minute rant on how awesome the Spanish bond auction was.

It was awesome. People who think that 'americans' would nuke places indiscriminatively are once again way off (for most of them, they are 'american', it explains it all)

All these ratings are just tools to squeeze people and rob them of their wealth.

'Americans' protect their own...

falak pema's picture

when does the Merkel cavalry move into Madrid?

timbo_em's picture

Clearly no need to worry here. Officials said that 59.3B Euros should do it for the whole 4,500B Spanish banking system. Not to forget that this is a worst case number with a probability of less than one percent.

machineh's picture

A one percent probability of needing a 1.3% capital injection.

So the value at risk here is just a few pesetas ... oops, I misspoke!

Josephine29's picture

I note that according to the analysis below that bank credit and particularly trade finance in Spain are dropping too.

Bank lending in Spain


Moving from what are problems caused by past decisions such as bad loans we also got an insight today as to the state of bank lending and credit in Spain. If we compare August with July we see that there has been a 1.1% fall in bank lending. If we compare with last year we see that bank lending is some 5% lower.


If we try to peer at lending to businesses as a signal we see that trade credit fell by a much more severe 4.5% in August compared to July and a rather chilling 17.5% compared to August 2011. So it looks as though Spain’s business sector is being squeezed hard on the credit front.

LongSoupLine's picture

Those loans aren't bad until after BarryO is reelected.

PUD's picture

but polaris industries sold a record number of snowmobiles and atv's!  even in the least snowy winter in recorded history! clearly we are not spain...america! fuck yeah!

Sheeple Shepard's picture


or something.

Seer's picture

Let's be clear here, there are NO peaks when we're dealing with infinity and an infinite planet! </sarc>

Sheeple Shepard's picture

Its okay I don't need the </sarc> , i'm not from North America.

PontifexMaximus's picture

bullish. don't forget, the draghi put is in the market. merkel wants to be reelected and the utmost will be done, to make so. therefore, nothing will happen, european markets need even this kind of news in order to kickstart indices higher. the only thing which will hurt much more, is the USD hitting 1.35 and moving higher. wait & see.

bullionbaron's picture

Speaking of parabolic charts, I put up a competition on my blog just now for anyone wanting to guess what the mystery chart is, there's a free ounce of Silver for the first person who can :)

LawsofPhysics's picture

Your chart is public/government debt outstanding.  Boom motherfucker.

BandGap's picture

This has to be getting extremely tenuous. Spain is the big brother of the Greek flaming turd.  They can dance all they want, but the outflows tell you what people in Spain think.  The bad joke will be the bank defaults that crush the little guy stupid enough to believe their money was safe. How stupid do they think their citizens are (rhetorical)?

And the youth unemployment is WHAT? C'mon baby, light my fire.

yogibear's picture

Greece and Spain can keep talking. The EU doesn't want anyone to leave. So the rest of the EU can support those that should be kicked out.


Non Passaran's picture

Falling yield on Spanish 10yr bond proves recovery is at hand.
Time to go all in for the pre-Xmas breakout!

slackrabbit's picture

We have Lift Off...

Dareconomics's picture

The only people who believed the results of Spain's banking stress tests were the journalists reporting them. Even Oliver Wyman, the consulting firm who prepared them, has refused to comment on the results.

I read several blog posts picking apart the tests, but the MSM went on blithely reporting them without questioning anything about the process or the assumptions underlying the tests. The fact that markets are not moving after learning that Spain is quickly approaching the worst case scenario shows that no investors did not believe in the results. Actually, markets are moving. Spanish yields have decreased as investors attempt to front-run a bailout.

Spanish banks will greatly exceed the worst case scenario within a few months. This is how banking crises work. Once a negative feedback loop starts, it only stops once a bottom has been reached. This bottom is nowhere in sight.

Spain's economy is reeling, and its budget situation is worsening. This will lead to more cuts in the name of austerity, which will further erode the economy. Using the Greek path as a guide, Spain is set for its economy to shrink over 3% for the next two years causing even more loan defaults than anticipated.

The news for these insolvent banks is only going to get worse, and they are stuffed to the rafters with Spanish sovereign debt. Before all is said and done, Spain will need to pony up more than the  €100bn that it has asked for. Add this figure to the €60bn in must finance for the remainder of 2012 and an estimated €207bn for 2013 based on very rosy growth predictions.

Whether the mainstream media wishes to report it or not, Spain is about to fail without a huge bailout.

JPM Hater001's picture

No one will connect but I will know...I want to ask Scott again...

With European debt piling on and Greece eyeing a default followed by Spain and Italy what do we have planned should the soveriegn debt crisis spread to our business?"

"Who asks those kinds of questions?"

"I do."