The Latest On Spain's Banking Disaster

Business Insider

Spanish banks are once again stoking the fires of euro worries.

Three headlines in the last 24 hours have renewed focus on the deterioration of the country's fiscal position:

This last development is causing the most hubbub today, as it is much the same path Ireland took to support its failing banks two years ago, however the government ultimately stumbled under the weight of those banks' debts and was forced to seek extra help anyway.

That said, Spain's bad loans as a percentage of GDP is much lower than Ireland's was when it finally received a bailout back in 2009. Officials have designated some €175 billion ($231 billion) in Spanish banks' real estate assets to be "troubled." This amount is equivalent to 16.3 percent of GDP. When Ireland received a bailout back in 2009, the National Asset Management Agency (Ireland's flavor of bad bank) was helping lenders to manage  €72 billion ($95.5 billion) in bad assets, some 36 percent of Irish GDP at the time.

Admittedly, Spanish banks' bad assets could continue to rise amid economic turmoil (bad assets already comprise a euro-era record of 8.2 percent of loans), but the differences between Spain and Ireland are contributing to investor uncertainty over whether or not this is a step in the right direction for Spain.

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