While non-performing loans (NPL) among banks in Spain is close to an all-time high at 11 percent, the real number is closer to 17 percent, a study from Exane BNP Paribas SA (EPA:BNP) (OTCMKTS:BNPQY) finds. The use of restructured loans and foreclosures skew NPL reporting to make the situation appear less dire than it really is.

Also see Spanish Banks Lose Half of All Profits Since 1992 In Less Than Two Years

Spain’s non-performing loans (NPL) ratio

Spain’s NPL ratio has grown 22 out of the last 24 months, the only two exceptions being December 2012 and February 2013, when four banks transferred assets to Sareb (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria), the so-called ‘bad bank’. Since Sareb is not considered to be an actual bank under Spanish law, even though it functions like a bank, this allows the Spanish financial sector to effectively write down the amount of toxic assets burdening the economy.

Spain NPL sequential


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