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Saturday, April 07, 2012 2:10 AM


Over 20% of All Real Estate Loans in Spain are Delinquent; Construction Firm Delinquencies Ended 2011 at 17.65%; Late Payment on All Loans Ended 2011 at 7.61%


Some rather shocking delinquency numbers (to mainstream media readers but not readers of Mish, Acting Man, Zero Hedge, Max Keiser, the Slog etc.) have surfaced in Spain.

Courtesy of Google Translate please consider The default property is multiplied by ten since 2008.

Upfront Notes:

  1. The following translation is somewhat choppy, and I present it as is. 
  2.  Recall that decimal points "." in Euroland are the equivalent of commas "," in the US. Thus "62.366 million" should read as 62,366 million or 62.366 billion euros. 
  3.  Many of the following just released numbers are as of the end of 2011. Rest assured numbers as of the end of the first quarter of 2012 are much worse.

With those notes out of the way, please consider the following translation.
Since the crisis began in 2008, the Spanish financial sector accounts have been seriously damaged by late payment of real estate companies, which rose from 1.98% in the first quarter of this year to 20.9% it closed 2011.

According to recent data published by the Bank of Spain of 298.267 million euros to the Spanish financial institutions were granted at the end of last year to real estate companies were delinquent 62.366 million, a figure that grew by 4.789 million in one quarter. In fact, between July and September 2011, the delinquent real estate companies stood at 18.97%, as there were 57.577 million euros a portfolio outstanding of 303,506,000.

As for the interannual evolution, real estate delinquencies rose seven basis points from 13.98% recorded in the last quarter of 2010 to 20.9% one year later, for a real estate loan portfolio totaled 315.782 million then , which fell in that period 17.605 million.

The Bank of Spain data also reflect strong growth in the delinquency of construction firms, and ended the year with 17.65% of outstanding claims, well above the 12.12% they had in December 2010. Compared to the previous quarter, the difference was just over one and a half points, as it stood at 16.09%.

The real estate and construction activity has gone from being the main driver of the Spanish economy its biggest drag in just four years, as has happened with the accounts of banks, which carry a much lower overall arrears of these depressed sectors .

In particular, late payment of credit extended by banks, savings banks, cooperatives and credit institutions closed 2011 at 7.61%, its highest level of the previous 17 years, particularly since November 1994 when it stood at 8%. This rise in defaults is a result of increased bad debts, which in December 2011 reached the EUR 135 838 000 134 227 000 compared to November, according to Bank of Spain.

Of that amount, the questionable real estate and construction touched the 80,000 million euros, standing at 79.759 million, which means that 58.7% of defaults across the Spanish financial sector came from this sector. But the situation was much worse a year ago, as the unpaid real estate accounted for 73% of total bank dubious, almost three quarters of the portfolio outstanding.

Meanwhile, the total credit portfolio of banks, savings banks, cooperatives and credit institutions fell to 1.782 billion euros in December, from 1.785 billion that were awarded in November.
Most mainstream media is woefully late in reporting this kind of news even though it is generally available with a bit less of a lag in Spain.

More importantly, some of us have predicted this catastrophe far in advance. Thus, what is shocking to many Johnny-come-lately analysts is simply a realization of what had to happen.

A few of us insisted from the get-go that Greece, Spain, and Portugal would all blow sky high, and that process is clearly underway now. The party is not over yet because those countries, and perhaps even Italy are destined to leave the Eurozone (or extract equivalent punishment out of Germany, Austria, the Netherlands and France).

Mathematically this must happen, so it will. Delays and bailouts will increase the costs.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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