MAP OF THE DAY: The Simple Reason Why Spain Needs To Pour Billions Into Its Banks

Spain is preparing to dump billions more into its troubled banking system, which may amount to €30 billion or more.

The reason: the country’s banks are still riddled with bad loans associated with its housing boom.

The average home price in Spain has fallen 12.8% since its peak, according to Nomura, and may yet fall another 8% in the next two years.

But around the country, there is wide divergence in terms of just how far prices have fallen. That divergence means Spain’s cajas, or local banks, are all experiencing a different degree of stress due to the price collapse.

Note the collapse in prices around Madrid and the Mediterranean, compared to the rest of the country. Cajas in those areas, many of which have already been forced to merge by the government, may be in need of more support.

Check out why Spain is the crisis everyone is afraid of >
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Photo: Nomura

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