The euro zone's biggest bank Santander has reported a sharp drop in annual profit after it set aside money to cover foreclosed Spanish property, anticipating government demands for lenders to recognise losses in the sector.
SPAIN-SANTANDER - The euro zone's biggest bank has reported a 35 percent fall in net profit.
Spain's Santander made just under five and half billion euros in 2011 - the drop was due to deteriorating property assets in its home market.The bank is the latest lender to set aside capital to cover its exposure to the property sector ahead of a government ruling on the issue.
It made 3.2 billion euros of extraordinary provisions last year.
1.8 billion of that is being earmarked to boost coverage for repossessed Spanish property assets from a third to a half.
Spain experienced a housing and construction crash four years ago.
It's banks still have hundreds of billions of euros of unsaleable land and property and unrecoverable loans to bankrupt developers on their balance sheets.
Santander can absorb the problems better than most Spanish lenders because of its strength abroad.
Only 10 percent of group profit in 2011 was home grown - Latin America, particualrly Brazil, contributed more than half.
It was the first time that had happened.
Sonia Legg, Reuters.