Sharp falls in Santander profit

Santander, the eurozone’s biggest bank, reported a sharp drop in annual profit after it set aside money against foreclosed Spanish property, anticipating government demands that lenders recognise heavy real estate losses.

Spanish banks have hundreds of billions of euro of unsaleable property and unrecoverable loans to bankrupt developers.

The outlook comes a day after data showed Spain’s economy looked set to slip into recession after contracting for the first time in two years in the last quarter of 2011.