Banks Shed Foreclosures & Compete With Sareb

1/09/2014 – El Mundo

Spains six largest financial entities have cut in their real estate exposure by €5.5 billion in the first half of the year. It total, they have sold a €40.24 billion worth of assets during the said period of time.

In parallel to the divestment process, repossession sales speeded up until reaching 40.000 units, however their number is still growing due to another wave of default on mortgages. Out of the total amount, the REO assets accounted for €3.99 billion.

CaixaBank owns the biggest number of developer loans and their value reaches €16.7 billion. Lending reactivation, improvement in the demand and the sale of its property servicing arm to TPG, all these helped it to advance in shedding the REO in H1.

The best performing entity was Banco Popular with 3.274 sold units. The entrance of two U.S. funds into the shareholding of Aliseda (its real estate maanger) has resulted in more aggressive sales, bringing the bank nearly €600 million in profits.

The rivaldry on REO asset sales with Sareb, Spains bad bank, pushed some of the entities towards lower pricing. Santander, that chose to stay with the market value prices, has underperformed by 27% during the first half of the year. Portfolio of the enity chaired by Emilio Botin is worth €3.53 billion in total plus €4.87 in developer loans. Moreover, its holings in Metrovacesa and Sareb amount to €1.4 billion.

Another bank that did very well in the first half of 2014 in the repossessed property sales was Sabadell. As a result of absorption of CAM, the number of foreclosures in its account jumped significantly up and now its servicer Solvia is struggling to sell them out.

In spite of the rebounce in the demand that allows to relax price slashing, real estate activity still equals to ballast bound to get rid of for the banks. From January to June, the largest entities injected a total of €1.8 million in the REO asset management.


Original article: El Mundo (by Javier G. Gallego)

Translation: AURA REE