• Spain's news in English

Dodgy boom-year loans cost Spain €2.6 billion

AFP · 29 Oct 2014, 12:32

Published: 29 Oct 2014 12:32 GMT+01:00

Facebook Twitter Google+ reddit

Spain's bank restructuring fund FROB has identified 42 suspect operations carried out between 2005 and 2008 by regional lenders that needed to by bailed out by the government, he said.

"According to preliminary FROB estimates...the losses from these 42 potentially irregular operations are estimated to total around 2.6 billion euros ($3.3 billion)," he told parliament's economic affairs committee.

Most of the operations that have been detected involved real estate loans, the minister said.

Spain's regional savings banks underwent an uncontrolled expansion fuelled by a decade-long housing bubble and the removal in 1989 on restrictions on establishing branches outside their home regions.

The number of savings-bank branches rose from 13,650 in 1990 to a peak of 25,035 in September 2008, according to a study by the Elcano Royal Institute, a major Spanish think tank.

By comparison the number of branches of Spain's two largest banks, Santander and BBVA, dropped over the same period from 17,075 to 15,617

But after the housing bubble burst in 2008 as the global financial crisis hastened a correction that was already underway in the property sector, the regional lenders needed to be bailed out by the government.

Spain received €42 billion in European bailout funds in 2012 to restructure the sector.

Story continues below…

The number of regional Spanish savings banks has fallen from 45 when the sector started being restructured to just seven.

In order to receive the EU funds Spain agreed to create a so-called bad bank, which took over €45 billion in toxic assets from the restructured lenders at heavily reduced prices.

Earlier this month FROB informed public prosecutors of 23 irregular operations that it had detected at Catalunya Banc and Novacaixagalicia which caused losses of around €1.5 billion.

For more news from Spain, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
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.

Spain faces crucial week as conservatives re-take power
Mariano Rajoy hopes to form a government this week. Photo: AFP

Spain entered a crucial week as acting conservative PM Mariano Rajoy prepared to re-take power, ending ten rollercoaster months without government marked by hope and disillusion.

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