Spain's Bad Loans Jump

According to new data released by the Bank of Spain, bad loans as a percent of total lending jumped to 8.72 percent in April from 8.37 percent in March. This compares to 6.36 percent a year ago, and is the highest reading since 1994. The Bank said that $6.1 billion soured in April. The bad-loans ratio rose to 7.43 percent in March from 6.86 percent in December and to 3.01 percent for mortgages from 2.74 percent.

Fears over the Spanish banking system and possible bailout scenarios may have driven Spanish 10-year bond yields to euro-area record highs. Spanish benchmark 10-year bond yields touched 7.19% earlier, but have since pulled back and currently sit near 7%. The report comes just one week after Spanish Prime Minister Mariano Rajoy asked European leaders to do more to shore up banks across the Eurozone,

On June 9, Spain formally requested a bailout of approximately $125 billion to help recapitalize its ailing banking sector. Spanish banks are suffering from souring loans, as highlighted by the Bank of Spain's issues. The request for a nation-wide bailout came only two weeks after Bankia's parent BFA Group asked for an astounding $24 billion in bailout money to recapitalize the failing lender.

In the report, the Bank of Spain also highlighted that lending fell 3.5 percent from the year-ago period and 1% from the month prior. Deposits also fell a remarkable 2.5 percent from the month prior, highlighting the continued deposit flight from peripheral banks.

Spain may well be hoping that a global resolution to this latest installment of the financial crisis arises at the G20 meeting this weekend. Leaders from the 20 largest economies of the world are set to gather in Mexico to debate the best way to get the global economy back on track.