16 August 2016 – Capital Madrid
(…). The seven largest banks, which are all listed on the Ibex, still hold almost €69,000 million in problem real estate assets on their balance sheets, a figure that increases to well above €75,000 million if we extend the scope to include all of the major entities. And those same entities refuse to put their assets on the market so as to not push prices down any further.
Neither the sales made at a loss a few years ago, nor the toxic asset transfers made by some entities to Sareb, have been sufficient to remove this hindrance from the entities’ balance sheets, which weighs down on their results, as well as on their default rates.
The excesses committed by the majority of the banks in the real estate sector will still take a while to be cleansed. Proof of this is the fact that the balance sheets of the seven larges entities still contain foreclosed assets amounting to €68,734 million, a figure that increases to more than €75,000 million if we take into account the most representative banks. (….).
Of the banks on the Ibex, Sabadell leads the ranking by volume of foreclosed assets, with €19,900 million, despite having reduced its balance by 14.2% with respect to the first half of 2015 and having increased its sales through Solvia, its real estate subsidiary. That is because the integration of CAM still weighs down heavily on the balance sheet of the group chaired by José Oliu (pictured above).
Santander’s real estate activity has generated €16,000 million of assets, of which €6,000 million relate to Metrovacesa. The group calculates that €3,800 million of its assets have been foreclosed, the same level as a year ago, along with €2,000 million in overdue loans. (…).
BBVA is still generating losses in its real estate business, amounting to €209 million. The group chaired by Francisco González (FG) still holds €11,400 million in foreclosed assets, which represents a reduction of 13.1% compared with a year ago, but its default rate has risen to 57.1%, when at the end of the first quarter, it stood at just 50.5%. (…).
Meanwhile, the group chaired by Ángel Ron (Banco Popular) still holds more than €11,000 million in foreclosed assets on its balance sheet and the creation of its real estate area does not represent the creation of a bad bank, as Popular’s Finance Director, Francisco Sancha, explained during the presentation of the bank’s half year results.
CaixaBank managed to reduce its foreclosed asset balance to just over €7,000 million during the first half of the year. The entity combined the sale of properties with the rental of properties, although its default rate was also weakened by the weight of property.
Bankinter is enjoying the least problematic time, with just €554 million in foreclosed assets, almost half of which are residential properties, whilst land accounts for 27%. Its lower exposure to the real estate sector enabled it to navigate better than its competitors through the fallout from the burst of the real estate bubble.
Original story: Capital Madrid (by José Luis Marco)
Translation: Carmel Drake