Sareb´s Profit Margin Is ´Narrow´

2/04/2014 – El Mundo

Chairwoman of the Management Company for Assets Arising from the Banking Sector Reorganization (known as Sareb in Spain), Belen Romana, stressed that profit margin of ´the bad bank´flowing from property sales is ´limited´for the reason that the asset transfer was conducted at ´prices adjusted to the 2013 market´. Moreover, she does not disclaim alleged target of the company to help taxpayers to dodge additional expenses.

In her first hearing before the Parliamentary Commission of Economy, Romana presented an annual stock-taking of Sareb and expressed ´full disposition´of attending courts as many times as necessary to provide complete information about the bad bank´s first-year-of-lifespan results.

During this year, Sareb carried out a due diligence portfolio revision of 107.000 own properties and another 215.000 units that are collaterals to loans trasferred to the entity by banks.

The examination drew the conclusion that ´Sareb acquired the portfolio at prices adjusted to the market of 2013´. That implies that its sales percentage is small. ´Basically, this was the reason why we studied and redesigned our business plan´, explains Romana.

Focus on Construction and Renting

Within the context, the chairwoman reminded that in 2014 the bad bank is going to invest €100 million in bringing construction of 130 housing developments to an end. Once finished, the total of 3.000 dwellings included in the project will be rented or sold.

Moreover, Sareb pursues at becoming one of the top five property sellers by enlarging sales from 25 (in 2013) to 30 units sold daily. ´Results from January and February encourage our outlook for this target´, the bad bank´s chairwoman says.

Undoubtedly, in 2013 Sareb sold  9.142 own properties and 2.343 items on behalf of developers. (…).

Precisely, the wholesale activity permitted it to sell 12 large asset portfolios. Two of them were traded through the Banking Asset Fund (FAB in Spain).

The rest of the assets brought total benefits in the region of €3.8 billion (41% corresponded to financial and real estate asset sales, 2% to lease and 57% to repayment, collection and interest management), out of which €3.2 billion were intended for cancellation of €2 billion debt. Another €1.2 billion of interests was paid to bondholders that accepted them as payment of €50.7 billion in total.  Altogether, net turnover in 2013 was equal to nearly €2.9 billion.

Romana has also emphasized the ´trascendency´ to be  achieved throught progressive ´repayment discipline and debt redemption´as the latter would allow cuts in financial cost and State risk. In turn, when that achieved, ´taxpayers will not have to bear more expenses for financial restructuring´. Whereby, the bad bank preps for debt repayment of 50% more than in 2013, until reaching €3 billion.

On the other hand, management, trading and maintenance costs consumed €401 million, out of which amount €196 million were paid to awarding entities as fees. (…) In total, Sareb lost €261 million last year.

Efficiency and Transparency

Romana assured that the recent changes in Sareb´s administrative board ´strenghtened the company´s structure and allowed ´better efficiency and agility´. (…).

She also claims that all the obligations to provide information to courts have been  ´meticulously´ met, as well as 100% of the recommendations of the Uniform Good Governance Code. For instance, 24 cases of potential conflict of interests were reported in 2013. (…).

Sareb´s policy on external servicer relations is similarly ´strict´. Last year, the bad bank involved 448 of them in 328 projects.

Finally, Romana guaranteed that Sareb will continue to provide the Justice and the Prosecutor with information about assumable ´mala praxis´cases. She also believes that her company´s results are catalysts for foreign investment in Spanish real estate.

 

To learn more about the Spanish bad bank, visit out SAREB section.

 

Original article: El Mundo

Translation: AURA REE

38