Banks continue increasing their real estate portfolio, in spite of some institutions being able of slowing down the pace of asset incorporation to their balance. The Spanish financial institutions have awarded properties for payment of debts (mainly empty homes, buildings on construction and land) for 39.226 million Euros at the end of June. This figure is their net accounting value (without the provision) and it represents an increase of 3,02% when compared with the previous semester, that is December 2012.
All groups have increased their portfolio during this period except those transferring their real estate risk to Sareb, the bad bank, such as Liberbank and BMN. Banks controlled by FROB (Bankia, Catalunya Banc and NCG Banco) transferred their awarded assets las year. Since then until the closure in June they have increased the number of awarded assets, as the assets they have not transferred are those with the worse quality. Even then, their exposure is residual.
Sabadell, BBVA and CaixaBank are the banks with the highest amount of awarded assets in their balance sheets, all of them over the barrier of the 6000 million Euros. CaixaBank is the one that has increased it the most, 21%, very far from the 3,29% of BBVA or 1,65% of Sabadell.
These three groups have been very active in the restructuring of the Spanish financial sector. Sabadell acquired CAM, Banco Gallego and part of the network of BMN. CaixaBank integrated Cívica and Banco de Valencia, while BBVA got Unnim. Part of the growth of the portfolio of awarded assets is due to problematic credits of the acquired institutions, sources within the groups explain.
In general, the increase of the portfolio of banks is a consequence of the difficulties faced by constructors and real estate developers, who cannot return the credits to the institutions and continue increasing the default rate. Banks keep these assets.
But in this semester there is also a worse behavior from homes (families) which had a mortgage in order to buy a home and are now losing them due to non-payments.
There are banks that have reduced the portfolio of awarded assets within the developers sector, but have increased it in the individuals one, thus not being able to reduce the total exposure.
This happened to Bankinter and Kutxabank. The first one has decreased the value of the awarded assets from developers by 7,85%, but has increased the one for individuals by 10,89%. As for Kutxabank, the setback in the developers portfolio is similar (7,06%), but in individuals the increase is much higher reaching 33%, up to 357,38 million Euros.
In absolute terms, CaixaBank is the bank that increases its portfolio the most, with 1072 million Euros more, reaching 6.159 million Euros. In percentage terms, NCG is the one rising more, 35%, although with a small figure (404 million Euros). The nationalized Galician bank has increased its awarded assets from developers and from individuals.
Banks have restructured these awarded assets with joint provisions of 37.146 million Euros. This amount represents a coverage of 48% on the gross value (net plus provisions).
Santander and Unicaja are the two banking groups with the greatest coverage of these assets at the end of the first semester, with 53,32% and 52,64%, respectively.
The cushion of provisions allows these institutions to start getting rid of these assets and to obtain earnings with the sales, even though earnings are minimal. At these prices the offer and the demand can meet for opportunistic investment funds, as shown by the recent sale of a package of more than 900 properties from Sabadell to the U.S. fund Anchorage.
The retail investor also increases its disposition to buy these properties, above all thanks to the great discounts offered by the financial institutions. Some banks are applying sales of up to 80% on certain properties. There are around 160.000 assets from financial institutions on sale.
The bad bank presided over by Belén Romana had in March 76.000 empty homes, 6300 rented homes and 14.900 plots transferred from banks with public aid, as included in its business plan.