• Spain's news in English

EU praises Spain's banks but wary over debt risk

AFP · 1 Oct 2013, 09:25

Published: 01 Oct 2013 09:25 GMT+02:00

Facebook Twitter Google+ reddit

Spanish banks are regaining access to funding markets and their deposits have been rising, the European Commission and the European Central Bank said in its latest report on Spain's programme of financial reforms.

But it warned that while there were signs that Spain's economic downturn was "bottoming out", the weak economy continued to weigh on the banking sector.

"Lending to the economy is still contracting substantially, in particular against the backdrop of weak demand for new lending and persisting EU banking markets' fragmentation," the report said.

"While there are early signs of a general economic stabilization, both the private and public sector need to reduce their debt stocks going forward, and the adjustment in the real estate market is still ongoing. Both elements still impinge on the profitability prospects of banks," it added.

The report forms part of the surveillance by the European Commission, the European Central Bank and the Washington-based International Monetary Fund to check Spain's compliance with conditions imposed in July 2012 in return for its banking rescue loan.

The three institutions, dubbed "the troika", concluded their fourth review of the reform programme on Friday.

Spanish banks have become swamped in bad loans since a property bubble imploded in 2008 plunging the country into a double-dip recession and throwing million of people out of work.

The proportion of loans held by Spanish banks that are at risk of not being repaid climbed to a record high of 11.97 percent of all credit in July, up from 11.63 percent the previous month, the central bank said in a report earlier this month.

Story continues below…

The government predicts the Spanish economy, the eurozone's fourth-largest, will return to growth of between 0.1 and 0.2 percent in the current quarter.

It forecasts economic growth will reach 0.7 percent in 2014 after shrinking by 1.3 percent this year.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Russia withdraws request to refuel warships in Ceuta
The aircraft carrier Admiral Kuznetsov was due to dock in Ceuta

Russia has withdrawn a request for its aircraft carrier group to be refuelled at the Spanish port of Ceuta, authorities confirmed.

Bulls replace guard dogs at scrap yard in Valencia
Two bulls will be patrolling the scrap yard in eastern Spain. Archive photo: AFP

Guard dogs were not proving enough of a deterrent to thieves at a car breakers yard in eastern Spain so the owner has brought in a pair of fighting bulls.

Two-headed shark born in Spanish laboratory
Scientists are studying the rare find. Photo: IBIMA / University of Malaga

Scientists at the University of Malaga found the embryo of a shark with two heads and just one body.

Spain under pressure to stop refuel of Russian warships
Russian aircraft carrier Admiral Kuznetsov is due to arrive in Ceuta. Photo: Mil Ru / Wikimedia

Spain is facing international pressure to refuse permission for a Russian warship flotilla to refuel in Ceuta en route to continuing airstrikes against the Syrian city of Aleppo.

Most wanted: Fugitive rapist arrested in Tenerife
Mohammed Jahangir Alam was arrested n Tenerife. Photo: Crimestoppers.

Mohammed Jahangir Alam, one of Britain's most wanted fugitives, who fled the country in 2008 after allegedly raping a woman, was found working in Tenerife.

Spain's Rajoy says king has tasked him with forming govt
Photo: AFP

Spain's king on Tuesday tasked Mariano Rajoy with forming a government, taking the acting conservative prime minister a step closer to power again after a 10-month political deadlock.

Two imams arrested in Ibiza resort over 'Isis support'
The men were arrested in the resort of Sant Antoni de Portmany. Photo: Jose A / Flickr

Two Moroccan imams at a mosque on the Spanish resort island of Ibiza were arrested Tuesday on suspicion of backing the Islamic State group and inciting jihad.

Balearic Islands choose to keep summertime forever
The islands will have longer evenings during winter. Photo: AFP

The Balearic Islands want to keep summertime when the rest of Spain turns the clocks back on Sunday.

  Brazilian had 'uncontrollable desire to kill': Spain police
Francois Patrick Nogueira Gouveia has been charged with murdering his uncle, his wife and their two children. Photo: Guardia Civil.

A Brazilian teenager accused of dismembering his uncle and aunt and killing their two young sons in a grisly crime that shocked Spain had an "uncontrollable desire to kill", police said on Monday.

Man rescued from bin after climbing in to find old clothes
Photo: Policía Local Murcia

Police were called after passersby reported hearing a man calling for help from within a rubbish bin in the Vistabella neighbourhood of Murcia, southern Spain.

Analysis & Opinion
Out of the dark: Five years on from Eta ceasefire
Sponsored Article
Last chance to vote absentee in the US elections
Spanish 'La Mafia' restaurants banned after Italian complaint
Spain's top court overturns bullfighting ban in Catalonia
Hunt launched for ten most wanted Brit fugitives hiding out in Spain
Napflix: Spaniards launch very boring TV channel for siestas
Madrid parish church faces fine over 'too noisy' bells
Celebrate expat life at Madrid’s THRIVE convention
Fury after kids told to bring their own loo roll to school
Disney announces plans for Don Quixote action movie
Activist tells 8-yr-old matador wannabe with cancer 'just die'
King to make last minute push to avoid third vote in Spain
Amazing photos of Catalonia's 'human tower' contest
What's on in Spain: October 2016
'No way, Jose! You'll never get your hands on our Rock'
Recipe: How to make a classic Spanish tortilla de patatas
Chorizo in paella? Go back to cooking school Jamie Oliver
Spain in eye of a perfect storm after 10 months without govt
Thousands share clips of life for 'Spain in a Day' film
Ten incredible Spain locations for Game of Thrones season 7
Analysis & Opinion
Why moving to Spain could be the best decision of your life
Seven reasons why autumn is the very best season in Spain
Spanish study finds four types of personality. Which are you?
New search underway for civil war grave of poet Lorca
jobs available