SPANISH bank loans in arrears as a proportion of total lending tripled to 2.5 percent in August, the highest level in a decade, as the end of a decade-old property boom spurred defaults.

Delinquent loans climbed to 46.13 billion euros (US$62 billion) from 40.84 billion euros in July and 14.07 billion euros a year ago, the Bank of Spain said on its Website, citing provisional figures. The loan arrears ratio, the highest since May 1998, is up from 0.84 percent a year ago and compares with 2.22 percent a month earlier, according to the central bank's Website. Bloomberg News reported.

The collapse of Spain's construction boom is driving developers such as Martinsa-Fadesa SA to seek protection from creditors as unemployment tops 11 percent, the highest in the euro region. Banco Espanol de Credito SA, a retail bank owned by Banco Santander SA, last week said its loan book shrank 5.3 percent between June and September as its arrears ratio tripled from a year earlier to 1.17 percent. "The Spanish banks have a better cushion than those in other countries, but it all depends on how long and how deep any recession is," said Alvaro Cuervo, an economics professor at Madrid's Complutense University and an expert on the history of the country's banking crises.

Spain's default rates have been low compared with international peers. Delinquency ratios in France and Italy were more than five times higher as recently as two years ago, according to the Bank of Spain's financial stability report in April. Spain's 45 savings banks have arrears of 25.47 billion euros compared with 6.21 billion at the same time in 2007.