Spanish Bad Loans At New Record, Deteriorate At Fastest Pace Since June

Tyler Durden's picture

For the green-shoot-minded, last month's albeit record high Spanish bank loan delinquencies was occurring as its first derivative was slowing. Well dash those hopes as this month sees bad loans not only rise to record highs (above 11% for the first time in history) but the pace of this drastic deterioration accelerated at the fastest pace since June. We are sure somewhere a Spanish finance minister is eschewing the 2nd or 3rd derivative as an indication that the worst is over but reality is that as FROB proudly notes the number of banks who have invested in its bad bank - in a strange and twistedly ironic reacharound whereby the bad banks themselves (all domestic, no foreign, Santander 16% stake!) are buying up the assets of the nation's bad banks - the sheer size and scale of this level of bad loan and deterioration (double in two years) is far beyond anything the sovereign's bad bank is prepared for. Of course, none of that matters as Draghi's magical OMT remains the ultimate backstop to any reality emerging. Spain - getting worse, faster.


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slaughterer's picture

"World -- getting worse, faster."

There, fixed it for you. 

economics9698's picture

The parasites won the war. 

GetZeeGold's picture



Hmmm.....I wonder why that is?

fonzannoon's picture

What's their 10yr yield....5.5% LOL. Sounds like a fair risk/return.

LongSoupLine's picture

Quick Draghi!! a fucking stress test to show everything's fucking hunky-dory.


Fucking stupid Europukes.  Bunch of fucking unelected shitheads fucking everybody but banks and hedge funds up the ass.

youngman's picture

It was saved...they told me it was saved.....I am so depressed now.....I think I will have a sangria

another 25% to go I think

JPM Hater001's picture

WTF.  I'm new here I thought everything in Europe was fixed?  Thats what Cramer told me anyway.

Nussi34's picture

Great! Bomb the PIIGSF!

timbo_em's picture

Ok, on the one side we have a bad bank created by circle-jerking with € 0.955B in tangible equity (55 percent private funds, 45 percent provided by the insolvent sovereign) and on the other side we have € 190B in bad loans that increase at 40 percent per year plus a real estate portfolio marked to 'longterm value' determined by the holder and ok'ed the troika.

Nothing to see here, sheeple. Keep on walking!

timbo_em's picture

Someone got confused with all those 'New Normal' 000s . It's € 955 million (955 000 000) in equity.

Jason T's picture

Sovereign Debt Crisis coming 2013!   

MyBrothersKeeper's picture

I was at a presentation last week where a respected economist (not a delusional one like Krugman) said the Greek exit is now off the table due to the formation of a "lendor of last resort".  The number he put out there was 500 billion.  The question in my head was: "why do all these people think that 500 billion Euro is enough to save Europe from itself?"  We know Greek targets are just an exercise in moving goalposts.  It is that most everybody feels like Greece is in bad shape but the rest of Europe is hunky dorey?  Must be true as many investment banks etc are now looking to buy Europe debt. I guess I can see what PIMCO is doing in buying Europe debt of short duration as the ECB etc is committed to buying the debt (much like front running the Fed) but it seems to me to be delusional to think that the rest of Europe is on a growth trajectory....especially considering articles like this consistently shed light on the fact that Spain (and probably others) are much worse off then we are led to believe.  The bigger worry in my mind is that the few economies that are growing (Germany etc) are going to be dragged down further and further as this "lendor of last resort" needs more capital inflow to keep the European Titanic afloat...after all Greek debt along is 500 billion.  Germany has begrudgingly gone along when pressed, but at what point do they risk their own sovegrnty (sp) and start to re-think their loyalties.  Eventually they will have to decide on whether they are going down with the ship or taking the last lifeboat. Considering their history and frugal nature I see no way they can be convinced to go down with the ship. The only other option is giving the ECB authority to print money.  When that happens the currency war is on for real.

From Germany With Love's picture

I think you are slightly mistaken about Germany. Germany will only take the last lifeboat when it feels the water actually rising to painful levels. The real threat to Germany is that by then it might be too late to leave.

Which is why I can only hope for a recession here soon.



MyBrothersKeeper's picture

Great post. What impact will the Merkel 2013 reelection bid have on this process...if any?

Dareconomics's picture

Non-performing loans at Spanish banks are increasing at a quickening pace. From September to October, bad loans rose from 10.71% to 11.23% to stand at over €189bn.

As bad as this number seems, it may have been massaged by the Bank of Spain. The lion's share of bad loans in mortgages, other real estate and commercial lending all increased by more than 10%.

  • Residential Mortgages 3.16% to 3.49%, a 10.4% increase
  • Real Estate loans 27.39% to 30.33%,  a 10.7% increase
  • Business loans 14.9% to 16.56%, a 11.1% increase

Yet, total bad loans in the system only increased 4.9%. Something odd is occurring here. Is there another large loan sector doing very well that we are not being told about? More likely, the Bank of Spain is using "dynamic provisioning" to smooth out the numbers.

The most optimistic economists have Spain returning to growth in 2014. At the rate change reported by the Bank of Spain, in fourteen months bad loans would have risen to €369bn. At the rate of change of 10% estimated from the bulleted numbers above, bad loans will reach that same figure in about seven months. 

The €100bn bank bailout is only the beginning. Much more will be needed to recapitalize Spain's banks. Will the Germans pay?


Full post with chart here: