Spain’s decision to refinance troubled property developers rather than write-off their bad loans will likely prolong the country’s recovery and pose new problems for lenders, according to analysts. They say that postponing the write-offs will translate into bigger provisions against losses, which will erode profits and make less money available for lending at higher prices. HSBC has predicted that bank profits could fall 28% this year if half of the construction and real estate loans turn bad.
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