Santander reduces its exposure to the real estate sector, although it slows the pace.

The real estate sector is penalized at the stock exchange and that is why everyone is trying to get rid of it. Banco Santander, the first financial institution to operate in the country, is not the one with the most credits to developers within the sector, nor is it the one which has obtained more assets through the assignment in payment.

In one year, the real estate activity of the bank has shifted from 19026 million Euros to 11580 million Euros, after a strategy of “reduction of assets”, the national share market commission explains. 6507 million of these are credits to developers, 53,7% less than the previous year and 3618 million Euros in seized properties included in the balance, 14,2% less in this year. The bank has another 1455 million Euros of shares in Metrovacesa – already excluded from the stock exchange- and Sareb, where he is the second biggest shareholder (16,8%).

From the point of view of the balance, the bank has created a perimeter called “discontinued real estate activity in Spain”, that includes credits to customers with “activities of real estate developments and which have a specialized management model”, it explains. Its subsidiary Altamira Real Estate and the rest of participated companies sold 8300 properties in the first half of the year, with an average discount of 45%.

It is true that this reduction of assets and exposure to the real estate sector is sensibly lower this year than in 2012. From January to June, Santander has reduced its credits to developers in 10,8% (around 600 million Euros less) and the value of the awarded properties in 1,5%, only 58 million Euros (37 in the second quarter). However, the real estate activity of the bank places it in a better position than its competitors such as La Caixa or Sabadell that have seen their real estate properties grow until June.

The managing director of the bank, Javier Marín, explained to analysts that the forecasts of the bank show a rise of default in the next few months due to the consumer credits and the credits to developers.

The bank has also reduced in 3% its mortgage portfolio to families for the acquisition of a home – one of its main businesses in Spain in the last few years – down to 51665 million Euros, that accumulate a default of 3,11%. One of the explanations is the slamming of mortgages within the sector, which has multiplied the value of the differentials. (…)

Source: El Mundo