Sareb Owns One Third Of Spain’s Problem Banking Assets

17 September 2015 – Expansión

Sareb is playing a key role in the clean up of Spain’s financial sector. According to a study conducted by the consultancy RR de Acuña y Asociados, proof of that is the fact that it now owns one third of the sector’s problem assets.

The firm calculates that the Spanish banking system’s exposure to problem real estate assets amounts to €259,049 million in gross terms, plus a further €32,337 million in doubtful mortgage debt.

According to the study, which is based on the latest available figures, Sareb has loans and real estate assets worth €44,263 million, which in gross terms – before they were transferred – would have been worth €94,750 million.

RR de Acuña y Asociados also highlights that the transfer of assets from entities with public aid to Sareb meant that the first (entities) recorded extraordinary valuation adjustments of €12,700 million. The assets transferred by Bankia, Catalunya Banc, NCG Banco – now Abanca -, Banco de Valencia, BMN, Ceiss, Liberbank and Caja 3 had an initial appraisal value of €106,970 million. Excluding provisions, RR de Acuña y Asociados has identified a mismatch of €12,694 million between the transfer value to Sareb, which the entities must have borne themselves.

Forecast

Although the volume of problematic banking assets has stopped increasing over the last few years, the consultancy warns that it will take time for the entities to digest the leftover real estate assets: “Although the trend in the volume of doubtful assets is stable and is even recording some small downward variations, if we take into consideration the precarious financial situation of the property development and real estate construction companies, all indicators show that the level of exposed assets will continue to behave in the same way, for the next two years at least”, says the report. This means “a decrease in the volume of loans and an increase in the volume of real estate assets”.

As such, the real estate firm observes “an over-supply”, which means that it is “unlikely that house prices will begin to increase in the coming years”.

Meanwhile, yesterday, Sareb announced the repayment of a senior debt tranche amounting to €47.3 million after amending the asset transfer contract it holds with Catalunya Banc.

The asset transfer agreement between the two entities established that either of the parties could make adjustments to regulate the transfer completed in 2012, for a period of 36 months following its signing.

Original story: Expansión (by J.Z. and J.M.L.)

Translation: Carmel Drake

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