The value of bad debts held by Spain's banks in July rose to $221 billion, according to figures from the central bank.

The Bank of Spain reported that 9.9 percent of banks' total loans were in arrears, up from 9.4 percent a month before. It was the highest bad loan ratio since the central bank began compiling the data in 1962.

Spain is reviewing the conditions of receiving assistance from the European Central Bank, according to Deputy Prime Minister Soraya Saenz de Santamaria, Bloomberg News reported.

Spanish banks' bad debts have risen steadily since the real estate bubble burst four years ago and the country fell into recession. Nearly a quarter of Spaniards are out of work, and many analysts believe Spain is inching closer towards seeking a full financial bailout.

The results of a final stress test on Spain's banks are due to be published Sept. 28, and will provide a basis for calculations as to which banks should receive European Union funds and how much they should receive.

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