20/05/2014 – Expansion
New draft circular by the Bank of Spain obliges Sareb (Spain´s bad bank) to value each of the assets in its possession (€200 billion in property and loans) in line with current market prices and to report annually about their damage.
The news has “bothered” both the bad bank and its stakeholders (Frob – Spanish Fund for Banking Restructuring – holds 45%, while the remaining 55% is divided among over 20 entities) due to the negative impact the revision will have on its annual results, the more that the damage recognition has not been foreseen in Sareb´s business plan for 2014.
Sareb will have to valuate 30% of its assets before the December 31st, then at the end of 2015 the percentage shall show 60% and 100% at the end of 2016.
In case of properties, the mortgage value will be taken as a reference for it is calculated individually by independent experts. In turn, the developers´loans will be labelled in accordance to their loss generation during the remaining life. When it comes to credits which have been non-performing for more than 18 months, their value shall be defined as “null”.
Once the valuation accomplished, Sareb will provide an annual report on its provisioning needs.
Original article: Expansión (by M. Martinez & J. Zuloaga)
Translation: AURA REE