28/03/2014 – El Confidencial
Sareb intended at least €38 million in 2013 to sign contracts with 259 providers of various services related to its real estate and fiancial management activity. Such over-employment contributed to the bad bank´s €261 million losses registered last year.
According to Belen Romana, Sareb´s chairwoman, most of the money was spent on the due dilligence process coordinated by lawyers, auditory companies and real estate brokers. As Romana admits, the cost could have been considerably reduced if the work conducted inside the bad bank.
Yesterday the company presented annual results revealing that 74% of overall expenses (non-financial), that is €401 million spent in 2013, corresponds to “external services” (the rest is personal expenses and Property Ownership Tax – IBI in Spain – cost). The majority of the services that consumed €196 million were management and marketing fees paid to old banks that transferred assets to Sareb and that are responsible for selling or renting the property. Next €39 million are the Owners Association expenses, €38 million “independent professional services” and another €25 million assigned as unprecised “others”.
The massive agreement signing pushed Sareb towards drawing its own business plan handed to Álvarez & Marsal and then to KPMG. Later on, the bad bank´s IT platform has been outsourced to regional banks.
The greatest part of the contracts were of due diligence type as Sareb was obliged to revise 200.000 assets, including loans and property, in its balance sheets. 13 firms lead by Clifford Chance were chosen for the task (5 lawyer offices: Gómez-Acebo Pombo, Pérez Llorca, Ramón y Cajal, Deloitte Legal and Broseta Abogados, and 6 consultants: CB Richard Ellis, Gesvalt, Savills, Knight Frank and Cushman & Wakefield) and again KPMG that revised transfer prices paid to aided entities and IBM as an IT solutions provider. Later, Cuatrecasas joined the crowd.
After that, various advisors entered the stage of large asset portfolio sales to majority shareholders as indpendent rental management and maintenance, insurance, property managers and so on to reach jointly 279 providers.
According to Sareb itself, the expenses could have been cut if all the proceedings had been conducted at home. Hiring more people would be much more economic and other experts, like notaries and land registrars could have done the work. The shower of contracts has evoked suspicion of illegal practics. However, without exaggeration: “Sareb is to disappear in 15 years and at this speed of spending money it might not survive by that time (…)”.
In spite of numerous agreements, still the problem of lack of a servicing platform has not been solved. Sareb does not have a unified market for all the properties in its possession and the banks that granted their assets to it (i.e. Bankia, NCG Banco, Catalunya Banc, Banco Valencia-Caixa, BMN, Ceiss and Caja3-Ibercaja) yet continue to manage them.
Romana explains that “various servicers offering banks´platforms are being created“, referring to Santander, Popular, Caixa and Bankia, and aditionally to Liberbank, BMN and Cajamar that have recently put on sale their platforms. “When we are sure where each of them ends up, we will take a decision”, she concludes.
To learn more about the Spanish bad bank, visit our SAREB section.
Original article: El Confidencial (Eduardo Segovia)
Translation: AURA REE