12 May 2015 – Expansión
The US ratings agency Moody’s warned yesterday that Spanish banks still have a lot of foreclosed real estate assets (on their balance sheets), which are continuing to put pressure on the real estate market and are weighing down on the credit profile of the financial sector.
In its weekly report, published yesterday, Moody’s explained that with the exception of the transfers that some entities have made to the Asset Management Company for Bank Restructurings (Sareb), the stock of foreclosed properties on the balance sheets of Spanish banks has increased steadily since the start of the financial crisis in 2008. “The (volume of) foreclosed assets is increasing even though the health of the Spanish economy and its banks has started to improve”, said Alberto Postigo, Senior Analyst at Moody’s.
In his opinion, the banks are avoiding selling assets at losses and are waiting for the market conditions to improve significantly. “Although the Spanish real estate market experienced a slight improvement last year, with a 22% increase in the number of homes sold compared with the previous year, and property prices have now stabilised following several years of decreases, the recovery is not yet sufficiently strong to reduce the stock”, adds the expert.
According to the Moody’s analyst, a variety of factors still persist, which are weighing down on the recovery of the real estate sector. These include high unemployment, a shrinking population and a huge stock of empty homes that the market is slowly absorbing.
Finally, the agency has points out that the exposure of Spanish banks to real estate assets, which include properties, as well as secured loans granted to construction and real estate companies, amounts to approximately €300,000 million. Real estate assets amounted to €83,400 million in total in 2014.
Original story: Expansión
Translation: Carmel Drake