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Spanish savings bank first to detail property debt

Source: Reuters - Thu 13th Jan 2011

Spain's Banco Mare Nostrum said on Thursday 23 percent of its loan book was related to real estate, the first of the unlisted savings banks to report their exposures to property loans under new Bank of Spain demands.

The Bank of Spain has ordered the nation's banks, including the unlisted 'cajas' that account for around half the financial system, to publish details of their exposure to construction and mortgage loans.

Concerns over the cajas' exposure to the collapsed property market have fuelled fears over the stability of the country's banking system.

BMN's total loan book is 52.6 billion euros, with 11.6 billion euros of that related to the property sector, the bank said. Of that 2.8 billion euros are bad loans and 1.8 billion are potentially bad.

The government has also driven the cajas to cut their number to 17 from 45 in a wave of mergers. All will release details of property loans over the next few weeks.

BMN, formed from the merger of regional banks Caja Granada, Caixa Penedes, Caja Murcia and Sa Nostra, said it would make 4.2 billion euros of losses under a worst-case economic scenario.

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