The balance sheet of Spanish banks is one step nearer to reflecting reality. BBVA has decreased the value of the real estate properties that cover their mortgages to adapt it to the fall of housing prices, according to financial sources. It is the first Spanish institution that adopts this decision this year and advances a practice that the Bank of Spain will demand from the sector. Part of this revision is due to the integration of Unnim, which could have its assets overvalued, according to the same sources. BBVA refused to confirm the operation or provide details declaring that it is “non public information”.
However, a report by Moody´s on the program of mortgage bonds of BBVA confirms this information. “At the end of 2013, BBVA has carried out a partial update of the value of the properties” that guarantee its mortgages and bonds. Moody´s declares that BBVA has revised the value “to reflect the falls of housing prices”, estimated in 30% since 2008. (…)
Since the start of the crisis the valuation of the mortgage guarantees has been followed by foreign banks and observers. Many believed that the homes and land were worth less than their value in the balance sheets and they demanded new valuations, in accordance with the reality of the housing market. These revisions could force banks to carry out adjustments in the provisions and the capital linked to mortgages.
Banks, which have loans with mortgage guarantees for 806.678 million Euros and bonds for 400.000 million Euros, declared that in general valuations adjusted to reality. They claimed that the balance could not be revised as a whole and that periodical updates were already carried out. (…)