(MoneyWatch) Depositors have continued pulling money from Spanish banks at an alarming rate. More than $50 billion was withdrawn in May, according to a new report from the Bank of Spain. That brings total withdrawals for the first five months of the year to $200 billion - about 16 percent of the nation's GDP.
The capital flight is the result of domestic banks sending money abroad, foreign lenders pulling out cash and mostly non-resident investors dumping Spanish assets. Over the last 11 months, funds equivalent to 26 percent of GDP exited the country, Tuesday's data from the Bank of Spain showed.
May was the month that saw the beginning of Spain's current, desperate financial crisis. On May 25, Bankia, the nation's fourth largest bank, and Catalonia, Spain's wealthiest region, both said they would need government bailouts. Since then the nation's recession has deepened; nearly 25 percent of the workforce is now unemployed. In the meantime, the government's debt has also increased, hampering deficit reduction plans.
The European Union has offered over 100 billion euro in loans to aid Spain's banks, a move which may have actually worsened the nation's problems. Because the EU cannot lend directly to private institutions, the loans would be on the government's books, thus adding to its debt load. Another concern about that loan is that it may not be enough to do the job: On July 18, the Bank of Spain reported the nation's financial institutions were carrying at least $191 billion in bad loans, a number many expect to grow.
But May was not the worst month for people pulling their money out of Spain's banks:, the fastest rate since the ECB began tracking these numbers in 1990.