"Exposure to the construction and property development sectorsimplies a significant risk for the Spanish banking system," thecentral bank said in a report. Spanish banks have taken increasingnumbers of properties onto books due to debtor awards, payments inkind and purchases and these amounted to $80 billion at the end ofDecember. The BoS said this activity is a habitual tool whendealing with loans related to construction and real estatedevelopment because guarantees comprise physical assets. The bankalso recognized that the figure could increase.

|

The bank calculated total potentially problematic exposure inreal estate by adding assets more than 90 days in arrears. Alsoadded in were substandard loans with weaknesses which coulddegenerate into debts, awarded properties, purchases of assets andincontrovertible losses. The Spanish central bank calculates that$599 billion of credit has been granted to construction andproperty development in the nation. Excluding investment inelectricity, airport infrastructure, petroleum, roads and railwayline construction, this falls to $541 billion.

AllanSaundersonis a managing editor of PropertyInvestor Europe and a contributor to GlobeSt.com.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.