Spanish Banks Must Add Another €50 Billion to Reserves
The government of Spain will require the country’s banks to add another €50 billion to reserves against bad property assets. The amount was higher than the banks had been expecting and contrary to some hopes that the country would establish…
The government of Spain will require the country’s banks to add another €50 billion to reserves against bad property assets. The amount was higher than the banks had been expecting and contrary to some hopes that the country would establish a “bad” bank as Ireland has done to be the depository for all the bad loans the country’s banks have made.
According to the Financial Times:
Of the €338bn of property-related assets in the Spanish financial system, about €176bn are bad loans, substandard loans or repossessed properties and land, according to the Bank of Spain.
About a third of the bad loans have already been covered by reserve requirements. The new requirement adds about 28% to the amount the banks will need to provide for. The €50 billion represents about 4% of Spain’s GDP.
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
