December 18, 2012 / 10:46 AM / in 5 years

UPDATE 1-Spain banks' bad loans hit new high in October

MADRID, Dec 18 (Reuters) - Spanish banks’ bad loans reached a new high in October, fuelling concerns about the health of its banking sector despite an injection of emergency cash from the European Union that could reach 41 billion euros.

Data from the Bank of Spain released on Tuesday showed that loans that fell into arrears rose to 189.6 billion euros in October, or 11.2 percent of outstanding portfolios.

They increased by 7.4 billion euros ($9.7 billion) from September, when the rate was 10.7 percent.

Non-performing loans on the books of the country’s ailing banks have risen steadily since a decade-long property boom ended four years ago, with the country in its second recession since 2009 and one in four Spaniards out of work.

Analysts expect bad loans to keep rising in coming months, with a stronger impact on the banks’ balance sheets.

“We will see an impact from new unemployed people from the public sector,” said Daniel Pingarron, from IG Markets brokerage.

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