25/08/2014 – Expansion
The top banks that did not need nationalising and have not transferred their toxic assets to Sareb are continuously absorbing the cost of the real estate risk, a huge stumbling block the Spanish banks had to struggle with over the past seven years of crisis and which is thought to be a constraint for the sector´s profitability for many years more.
The property management firms of Santander, BBVA, CaixaBank, Sabadell and Popular lost a total of €1.8 billion in the first half of the year. During the same period of time in 2013, the branches showed €1.64 billion in the red. However, the numbers should not be compared with each other as the H1 2013 one does not include the real estate turnover of CaixaBank, revealed only this year.
The largest entities in Spain still hold a gross value of €140 billion in property, developer and builder loans and holdings, including their shares at Sareb (Spain’s bad bank). Over the past year, their exposure to real estate diminished by 6.5%.
In the first half of the year, the most acute losses hit CaixaBank – €468 million in total: €418 million deriving from its banking business, €247 million from insurances and €108 million from stakes. Santander and BBVA also lost a lot of money through their property managers: €307 million and €446 million respectively. Likewise, Popular´s servicer brought about a €299 million loss, patched up by almost €400 million earnings, whereas the net loss of Sabadell showed €271 million in the red.
Regardless the losses, the largest Spanish entities prep for good times. On one hand, their toxic asset volumes shrink, especially due to provisions made in 2012. The looming economic recovery, better dinamics on the real estate market and the granting of the asset management to specialized opportunistic funds considerably add to the banks´ REO sales.
Original article: Expansión (by M. Martinez)
Translation: AURA REE