Spanish banks have generally fared well in the global financial crisis and put a brave face on problems in their own backyard. First, they were hit by the collapse in Spain’s commercial property market. Now the downturn is gnawing into their consumer lending portfolios. The ratio of bad loans to overall lending stood at 4.27 per cent in March. That is comparable with lenders in central Europe, and could well get worse: Credit Suisse believes it could rise above 8 per cent this year. Yet, oddly, growth in bad loans appears to be slowing, according to the latest Bank of Spain data.

Among cajas, the unlisted regional savings banks that account for half the market and have been particularly hurt by the property slump, the number of bad loans is even shrinking. There is no obvious reason why this should be.