11:09AM BST 17 Aug 2012
Bad debts climbed to 9.42pc of total lending, the Bank of Spain said on Friday, the highest since records began in 1962.
The data showed that €164.4bn of loans were more than three months past their repayment deadlines.A month earlier, the bad loan rate was 8.96pc.
Deposits of households and companies fell 6.59pc from a year earlier, the regulator said.
The Spanish government has come under market pressure to seek a full scale international rescue after agreeing a €100bn bail-out to recapitalise its battered banking sector.
Spain's prime minister Mariano Rajoy has so far remained tight-lipped on whether the country will ask for a second bail-out, but he repeated this week that any decision would be made in the best interest of Spaniards.
Reports in the Spanish media on Thursday suggested that the country may ask EU authorities to use leftover funds from its €100bn bank bail-out to buy sovereign debt.
Sources told El Confidencial that EFSF bond buying would "maximise the efficiency of financial assistance."
The yield on Spain’s benchmark 10-year bond fell by 10 basis points on Friday morning, to 6.38pc. Last month, Spanish borrowing costs hit a record high of 7.75pc.
Spain's elevated borrowing costs means lenders become increasingly reliant on the European Central Bank for funding. Data this week showed that total Spanish bank borrowing from the ECB climbed 11.5pc in July to €376bn compared with €337bn in June.
