Banks Still Have to Digest €80 Bn Real Estate

19/05/2014 – Cinco Dias

The real estate bubble burst flooded the banks´ balances with repossessed housing. At the beginning, they refused to sell the stock at abated prices but the provisions imposed on the entities in 2012 left them no way out.

In 2010, the Bank of Spain estimated that the real-estate-owned assets of banks were altogether worth €70 billion. After having transferred €11.400 billion to Sareb (€50 billion with loans), today the entities still have got €80.7 billion in property to shed.

According to a recent report by La Caixa´s Economic Research and Analysis department, the ballast is presently hanging on 15 major Spanish banks: Santander, BBVA, CaixaBank, Sabadell, Popular, Bankia, Bankinter, Kutxabank, Unicaja, Ceiss, BMN, Liberbank, Ibercaja-Caja3, Novagalicia and Catalunya Banc.

The biggest part of the asset lot is at the same time the most troublesome as around €30.5 billion corresponds to plots. Apart from Madrid and Barcelona where sales have not halted, land remains the most paralyzed asset. Fortunately, the banks have the plots provisioned in 60%, while the property in 49%.

Houses cling to their balances as well. Entities own nearly €30.44 billion in finished residential property out of which a €16 billion worth corresponds to foreclosed homes due to mortgage payment failure and €14 billion to apartments of real estate developers. In parallel, banks possess €6 billion in other real estate assets, such as storage rooms, garages and other attached.

Also, this scope involves smaller provisions showing 37.80% in case of foreclosed homes and 50% in case of developers´ property. Throughout 2012, the six largest entities solely sold 180.000 properties.

Unfinished housing developments represent €4 billion, only 5% of the total. Many banks have started to re-take the halted works, for instance, among Santander, BBVA, Sabadell and Bankia, over 6.000 houses took the path to accomplishment last year.

 Although in 2013 the number of repossessed assets rose by 14.5%, banks assure they screeched down and we may even speak of “a turning point”.



Original article: Cinco Días (by Juande Portillo)

Translation: AURA REE