How Spain landed in a mess due to its banking crisis

A day after Spain conceded it needed outside help following months of denying it would seek assistance, Prime Minister Mariano Rajoy said more Spaniards will lose their jobs in a country where one out of every four are already unemployed.

So who rocked the country’s boat? Madrid’s financial problems are not due to Greek-style government over-spending.

The country's banks, particularly its savings banks, or “cajas”, got caught up in the collapse of a real estate bubble in 2008 that got worse over the past four years.

However, as Spain's leaders have struggled for a solution to their banking crisis, the country's borrowing costs have soared close to the level that forced the governments of Greece, Portugal and Ireland to seek rescues.

A look at the newest hot spot in the euro zone’s debt crisis:

Spanish banks are struggling with toxic real estate loans




Last month, S&P lowered ratings on the debt of Bankia and four other banks and said it was taking a dimmer view of Spain's economy.