Spain Lending Shrinks at Record Pace as Defaults Rise

Spanish banks reduced lending at a record pace and defaults mounted as the country’s recession and rising unemployment took a toll on their ability to make loans to solvent borrowers.

Lending fell by 3.3 percent in December from a year before, the biggest drop since Bank of Spain records started half a century ago, the regulator said on its website today. Bad loans as a proportion of total loans rose to 7.61 percent from 7.52 percent in November as borrowing considered “doubtful” jumped to 136 billion euros ($179 billion) from about 11 billion euros five years ago, before Spain’s property crash.