Spanish Mortgages & Bank Bad Loans Surge To Record High

In September, official data showed on Monday, despite the near completion of a €41 billion euro zone – financed bailout of the battered financial sector

Risky loans, mostly linked to the collapsed property sector, climbed by 6.9 billion euros from the previous month to an unprecedented €187.8 billion ($254 billion) in September, a Bank of Spain report showed.

The bad loans rose to 12.68 percent of all credit extended by banks in Spain in September from 12.14 percent in August, representing a fourth consecutive record high.

Last year, the eurozone agreed to extend a rescue loan of up to €100 billion to shore up the balance sheets of Spain’s banks, swamped in bad loans since a property bubble imploded in 2008 plunging the country into a recession.

Spain, the eurozone’s fourth-largest economy, has drawn €41.3 billion from the rescue loan.

Despite the persistently high level of bad loans, Prime Minister Mariano Rajoy’s government last week said it would exit the eurozone-funded banking bailout in January.

Economy Minister Luis de Guindos said in Brussels that Spain would not request fallback assistance from the European Stability Mechanism, a rescue fund set up to provide a safety net for heavily-indebted governments.

While applauding Spain’s decision for the signal sent to markets, eurozone finance ministers called on Madrid to push forward with reforms to address the country’s economic challenges, budget shortfalls, high debt, and mass unemployment.

European Union chiefs said Spain’s draft 2014 spending plans placed it “at risk of non-compliance” with its deficit-cutting targets. Spain has agreed to respect EU-norms by reducing the deficit to less than three percent of total economic output by 2016.

Spain suffered a double-dip recession after the 2008 property collapse, emerging gingerly from the last downturn with 0.1-percent economic growth in the third quarter.

Economists warn of threats to its economic recovery, however, and say that the unemployment rate — running at 26 percent in the third quarter of 2013 — will remain painfully high for years to come.

AFP (news@thelocal.es)

FFA Comments

Spanish mortgages & Bank Bad Loans surge to record high! This is obviously still causing major problems for a large number of Spanish mortgage banks which is making the whole economy very sluggish. But this isn’t the case for all of Spain’s banks and there are a number, albeit small, that have not needed government bailouts or had to use all their financial reserves to balance their books who are generally still lending fairly normally.

These banks that are still out there lending to new clients I believe will take a large share of the market as they are the ones who are capturing new business and generating some movement in the economy.

Bankia to close 99% of branches on the Costa del Sol

Worrying news for Ex Caja Madrid & Bancaja customers as staff are told to announce that Bankia are to close 99% of branches on the Costa del Sol.

Bankia España

Having heard the rumour that Bankia were closing all of its branches in Marbella I decided to pop into my local branch (Ex Caja Madrid) to see if the gossip was in fact true.

I emailed the branch manager to see if he was able to meet with me to discuss this and to my surprise I received a very quick response informing me that he was available to do so and we arranged the meeting with no problem at all.

Basically the outcome of the changes are that all ex Bancaja and Caja Madrid branches will be closed in Andalucia apart from a few representative branches in Major cities including Malaga.

This means that if you are an existing Bankia client you will have to go to Malaga to speak to someone face to face which can be a huge inconvenience.

What should you do if you have a relationship with Bankia?

Well it really depends on the type of relationship you have, for instance, if you just have a current account or savings account then it would be fairly easy to make the transition away from them to another more stable local bank of your choice. If on the other hand you hold a mortgage or then you will need to keep your account open with them for payment of said loan but that doesn’t mean that you still couldn’t open a new account with a new bank and arrange regular transfers to service the mortgage or loan that you already have.

Personally given the terrible press that Bankia have had in recently months / years, I believe it would be a good idea to relocate your banking relationship away from Bankia especially if you have savings with them as, even though they have had government / tax payers money, it still doesn’t guarantee that money would be 100% safe and anyway, why would you want to travel to Malaga or Seville just to query any charges you may have incurred.

If you need to talk about your Spanish bank account and potentially moving it, please don’t hesitate to get in touch with Fluent Finance Abroad.