MADRID, Oct. 19 -- Arrears in the Spanish banking sector set a new record in August reaching 10.5 percent, according to data released on Thursday by the Bank of Spain.

It is the first time arrears have passed the 10 percent mark and this figure means that banks, saving banks, cooperatives and credit finance entities have 178.579 billion Euros in loans and unpaid credits. This figure experienced a 39.7 percent increase from August 2011 (127.785 billion in arrears).

The non-performing loan rate of the credit finance entities reached 8.97 percent, which represents 3.541 billion Euros. The Bank of Spain did not publish separate data for the arrears of the remaining entities, whose joint non-performing loan rate reach 10. 6 percent.

The rise in non-repayment of debts is a direct result of the economic crisis, which has caused many people to lose jobs or to accept wage reductions. Meanwhile many small and medium sized businesses have been forced to close by the crisis, which has especially hit construction and property companies, whose bankruptcy has left the Spanish banking system ridded with toxic assets.