Default in Banks Scrutinized by Experts

15/07/2014 – Expansion

Spanish banks swear they have decreased their number of non-performing loans and the statistical improvement confirms the turning point in economy after the recession. Unfortunately, analysts claim that deep-down evaluation of the entities´ health proves the recovery will take much more time.

After the real estate bubble burst and subsequent severe recession, soured loans fell at 13.4% of the total in April over the record 13.6% in December, according to the Bank of Spain.

However, some specialists warn the investors should pay careful attention to the default in banks as this is the most reliable indicator, encompassing REO assets, restructured debt and the loans transferred to Spain´s “bad bank”. At the end of the first quarter, troublesome assets represented €372 billion, meaning the default made 22% of all the banks´loans, says an analist at Exane BNP Paribas, Santiago López Díaz.

The concerns about the health of the banks operating in the south of Europe have dissipated during the last year. But they come back twice as strong together with the case of Portugese Banco Espírito Santo, whose shares were sold off feverously all over the continent.

Spanish entities were among the beneficiaries of the return of confidence to the market. Shares of four largest Spanish banks shot up by 17.8% on average year-to-date.

The national banks usually make their default information public but they do not provide any quarterly data on their toxic assets.

 

Original article: Expansión (after the Wall Street Journal by Jeanette Neumann)

Translation: AURA REE

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