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Echegoyen Explains Sareb’s Performance 3 Years After Its Creation

4 November 2015 – Europa Press

Sareb was created in 2012 and has been granted a period of 15 years to manage and sell all of the assets transferred to it, almost 200,000 in total. It has until 2027 to liquidate them. (…).

Sareb’s President, Jaime Echegoyen, has acknowledged that the company’s progress is “quite slow” in terms of the divestment of assets, but he is confident that sales will be “greater” in the future. “The market is not ready and so, we have to wait”, he added.

Since its creation, Sareb has managed to reduce its volume of problem assets by €7,420 million, which in percentage terms represents 14.7% of its total assets.

Nevertheless, it is now waiting for the right moment to make further write-offs, according to the management team at the organisation.

Evolution of the portfolio

When it was created, the ‘bad bank’ received around 200,000 real estate and financial assets and 400,000 collaterals valued at €50,781 million.

Sareb stresses that its portfolio has transformed since then, with real estate assets gaining in weight, at the expense of financial assets. They explain that this is due to the transformation of the balance sheet, since the performing loans disappear from the portfolio once they have been fully repaid.

Sales to June 2015

During the first half of 2015, Sareb sold 5,345 units to retail clients, at a rate of 30 homes per day, compared with the average of 42 in 2014 as a whole. Moreover, it has seen renewed interest in land, whose sales have multiplied by 3.6x “although their financial impact is still insignificant” in terms of the company’s total revenues.

At 30 June, Sareb’s asset portfolio amounted to €43,361 million, of which 74% corresponded to loans and the remainder, 26% to real estate assets (primarily residential, land and tertiary property). (…).

Servicers

The company’s activity during the first half of the year has been hampered by the entry into operation of four new ‘servicers’ or real estate managers, which has involved the migration of a “huge” volume of loans and properties from the nine originating entities to the servicers’ platforms.

According to Echegoyen, the migration has involved the transfer of all of the information and documentation relating to 162,000 assets, which represents for example, four million documents and 325,000 keys.

Since it began its journey three years ago, Sareb has reduced its volume of problem assets by €7,420 million, and has also repaid €5,400 million of the €50,700 million debt it had to issue in order to acquire the portfolios of loans and properties from the banks affected by the crisis. (…). As such, the company has reduced its perimeter by 14.7% and cut down its debt by more than 11%.

During the same period, Sareb has generated revenues amounting to €10,500 million, has sold almost 30,000 properties to individuals and has managed around 25,000 proposals from companies. Moreover, it has carried out 25 large operations to sell wholesale asset portfolios, mainly loans, an activity that represents just 20% of its turnover.

“Sareb has demonstrated its ability to divest assets and generate revenues”, says Echegoyen, who added that the model “works” and that the company “has become an international point of reference”, as well as an “example” for other countries facing similar crisis situations.

Original story: Europa Press

Translation: Carmel Drake