HispanicBusiness

The share of bad loans on the balance sheets of Spanish banks dropped in December to 167.4 billion euros (217 billion dollars), after going up for 17 consecutive months, the Bank of Spain said Monday.

Bad loans now make up 10.4 per cent of total debt, down from 11.4 per cent in November.

The central bank attributed the change to the creation of a bad bank, Sareb, which is absorbing toxic real estate assets in order to sell them.

Spain's property crash of 2008 left banks burdened with billions of euros in losses and prompted a restructuring process, which the eurozone is backing with more than 40 billion euros in aid.

A loan is regarded as having gone bad if payment has been delayed for three consecutive months.

Spain is struggling to emerge from its second recession in three years, with unemployment having surpassed the 26-per-cent mark.