Santander hit by bad loan provisions
Spanish banking giant, Santander, has today reported a fall in third quarter profits, due to changes on bad loan provisions.
The bank, which is the euro zone’s largest, said third quarter profits fell 13% to €2.1 billion (£1.8 billion) as provisions for bad loans hampered results.
Before the changes to one-off provisions, which were put in place as a precautionary reserve for loans turning bad, profit for the third quarter was €2.107 billion.
The figures come shortly after Spain’s second largest bank, BBVA, reported a 17% fall in quarterly net profit – again impacted by loans provisions.
Spanish banks have been hit hard by the economic downturn – partly due to the slump in the country’s once booming housing market.
The slump has led to many developers and homeowners unable to meet their loan payments.
In related news, Santander recently acquired the Williams & Glyn’s network of branches from Royal Bank of Scotland.
The majority of the branches are in the North West and will be turned into Santander banks, with the process expected to be completed by December 2011.
The deal will give Santander approximately 1,645 branches, or 12% of the market, and cement its status as the second largest mortgage loan provider.
The Spanish bank already has a major UK presence after acquiring Abbey for £9.5 billion back in 2004.
In July 2008, it rescued troubled mortgage lender, Alliance & Leicester, and a few months later, it took ownership of Bradford & Bingley’s savings business and branch network.
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