(Recasts to add ‘bad bank’ liabilities and details) MADRID, March 31 (Reuters) - Spain’s public debt reached 120% of gross domestic product last year, above the previously reported 117.1%, the Bank of Spain said on Wednesday, after adding ‘bad bank’ liabilities stemming from the financial crisis a decade ago as demanded by Brussels. The debt-to-GDP ratio spiked from 95.5% at the end of 2019 and 114% in the third quarter of 2020, mostly due to increased spending to cushion the effect of the COVID-19 pandemic and a simultaneous economic slump. The higher final debt ratio confirms what a senior government source told Reuters last week. The ‘bad bank’, known as SAREB, was created to take on over 50 billion euros ($58.7 billion) in bad loans and other toxic assets from nine Spanish savings banks during the financial crisis in 2012 as part of an international bailout for Spain’s financial sector. The accounting change follows demands from Eurostat, the European Union’s statistics body, that the bad bank, known as SAREB, should be considered a public entity. ($1 = 0.8524 euros) (Reporting by Aida Pelaez-Fernandez; Editing by Inti Landauro, Andrey Khalip and Jan Harvey)