Spain’s banks facing 156bn euros of risky loans

Spain’s banks had 155.84bn euros (£122bn) of loans on their books in May that are at risk of not being repaid, the highest since 1994.

The figure for “doubtful” loans is 8.95% of total lending extended by Spanish banks, the Bank of Spain said.

Much of the potential bad loans relate to the bursting of Spain’s property bubble and decent into recession.

The figure underlines the weakness of many Spanish banks, which in 2008 had doubtful loans of 3.37% of all lending.

Last month, eurozone countries agreed to provide up to 100bn euros to support Spanish banks and put risky loans into a “bad” bank.

Further details of the arrangements will be discussed at a eurozone finance ministers meeting on Friday.

In May, Bankia had to be bailed out by the Madrid government.

Spain has the highest unemployment rate in Europe, and property prices have been falling at an annual rate of more than 10%.