Companies linked to the construction industry in Portugal owe banks a staggering €2.8 billion because of the economic slowdown.
Worst hit are construction and cement companies that invested heavily in putting up low to mid-price apartments in the period before the economic crash in 2007.
The astonishing amount represents more than half of the total amount of credit default in the country. And when this sum is added to the quantity of people falling behind on their mortgage payments, this sum soars to €4.8 billion.
The latest figures were released by the Bank of Portugal on Monday. At the end of April the total number of bad debts owed by all companies in Portugal has reached €5.5 billion– €195 million worse than the month before.
In relation to the same period last year, rotten debts owed to banks and finance companies have soared by €476 million– the equivalent of €1.3 million per day.
The Bank of Portugal report states that “despite the enormous efforts made by families to meet their mortgage payments each month, mortgage defaults and defaults in consumer credit (in Portugal) has risen considerably”.
Credit default has, according to the bank, reached the highest levels since records began.
The amount owed on defaulted mortgages and mortgages in arrears by April had already reached €1.9 billion, €11 million more than in March.
The construction industry alone – not including raw material suppliers – topped the default ranking owing €2 billion.
At the end of 2010 Portugal’s banks wrote off millions in credit considered to be irrecoverable. But despite the effects of the crisis, the Bank of Portugal says that families are saving more of their disposable income.
Between March and April 2011 savings deposits climbed €504 million.