24/09/2014 – Cinco Dias
Strong ties between financial entities and appraisal firms, many owned by banks anyway, made Spain’s Central Bank take an action few years ago. The fact, that an arm of a bank was responsible for valuation of a property for which the bank granted a loan – widely practised during the real estate boom – or that they could dictate the discount applied on a delinquent mortgage after the bubble burst has been a clear conflict of interest for years.
However, the pressure from the side of the central authority led to reduction in the banks’ appraisers number from twelve (controlling 46.8% of the market) to a shy 4.9% share.
This is how the latest Economic Bulletin by the Bank of Spain puts the matter, basing on data gathered at the end of 2013. According to them, presently, there are three appraisal companies in the hands of banks: Sociedad Integral de Valoraciones Automatizadas (Sivasa) belonging to Banco Santander, Tasaciones Andaluzas of Unicaja and LKS Tasaciones (tasación = appraisal, translator’s note), owned by Caja Laboral.
Last year, also Global Gestión de Tasaciones (Ibercaja), Compañía de Medios y Servicios de Tasación (Cajasol later absorbed by CaixaBank) were operating on the market and closed their activity at the end of 2013.
A year earlier, Bankia had sold Tasamadrid to private equity fund Advent, since 2010 the owner of Tinsa, a huge appraisal firm held by 35 savings banks. Then, CaixaBank transferred Valoraciones y Tasaciones Hipotecarias (VTH) to Gecopinsa Tasaciones, while Banco Sabadell (that had inherited CAM Tasaciones from Bienes Mediterraneo) and Novagalicia (owning Tasaciones y Valoraciones e Galicia) decided to close their appraisal affiliates.
The objective of the Bank of Spain is to ensure maximum independence to the country’s appraising firms. Minister Luis Maria Linde forbids the directors of the firms to maintain direct contact with salesmen of the banks which hold a share in their capital.
In 2013, financial entites accounted for 71% of clients of the companies. Thus, practically one third of the total gains of 42 appraisers not held by banks proceeded from their ‘significant clients’.
Speaking of conglomeration in the sector, the Bank of Spain reports that ‘37% of all appraisals and the earnings corresponded to two major firms’ and the top five controlled 57% of the total.
Original article: Cinco Días (by Juande Portillo)
Translation: AURA REE