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

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.