Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest lender, said customers have refinanced or restructured 29 billion euros ($39 billion) of loans as the economic slump makes repayments more difficult.
About 80 percent of those loans were in its Spanish parent company and Unnim, a grouping of former savings banks acquired last year, the Bilbao, Spain-based lender said in its 2012 annual report posted on its website. Of the total, 8.6 billion euros is already classed as impaired, the bank said.
The practice of refinancing or restructuring loans has raised questions about how accurately banks are recognizing asset losses as a five-year economic slump drags on. Excluding real estate lending, Spanish banks refinanced about 140 billion euros of loans, according to data from Oliver Wyman, a consulting firm that did a stress test on lenders last year.
“It’s a negative sign,” said Juan Pablo Lopez, a banks analyst at Espirito Santo Investment Bank in Madrid. “It does show the stress that the loan books of even the strongest banks are under.”
Refinancing for individual customers at group level reached 11 billion euros, with 7.94 billion euros for property developers, the bank said.
BBVA SA, the Spanish parent, had 46,238 restructuring or refinancing operations worth 5.2 billion euros linked to mortgages with individuals, the bank said. Of that amount, 1.1 billion euros is already classed as impaired, the bank said.
The Bank of Spain last year ordered lenders to start publishing information on loan refinancing as part of efforts to increase the transparency of their balance sheets.
BBVA lending to customers in Spain was 201 billion euros at the end of 2012, while gross loans restructured or refinanced in the country totaled 23 billion euros. The bank ended 2012 with 6.9 percent of its Spanish loan book in default compared with 11.4 percent for Spain’s banking industry as a whole in November.
BBVA said in the annual report that the bank doesn’t refinance or restructure loans to delay recognition of losses. Such operations are “carried out with customers who have requested such an operation in order to meet their current debt payments if they are expected, or may be expected to experience financial difficulty in making the payments in the future,” the lender said.