The IMF Commends Sareb’s “Effective” Management & Divestment Progress

10 October 2017 – El Diario

On Friday, the International Monetary Fund (IMF) commended the “effective” management of Sareb and its progress in the asset divestment process, which has enabled the real estate company to liquidate 22% of its portfolio and 20% of its debt in its four years of life.

“To date, Sareb has fulfilled its objectives quite well, and the review of its business strategy seems to be well designed”, acknowledged the supervisory body in its latest report evaluating the Spanish financial sector.

Nevertheless, it adds that the company, created in 2012 to help with the clean-up of the banking sector, will face challenges in the future.

In its report published on Friday, the IMF refers to: the highly sensitive nature of Sareb’s activity to the evolution of real estate prices; the financial expenses that the entity must pay to service the debt that it took on to purchase assets back in the day; and the “stiff competition” from the banks, which are also divesting their real estate portfolios.

Even so, the body endorses the progress that Sareb has made to reduce the perimeter of assets received from the financial institutions by so much, as well as to service its commitments to repay its debt, which is guaranteed by the Spanish Treasury.

For the IMF, behind this progress, is the “effective” approach that Sareb applies to managing the portfolio, and which includes strategies for “the transformation of loans into properties, the recovery of loans, the sale of assets and the reactivation and sale of suspended projects”.

In the opinion of the institution, which is headquartered in Washington, Sareb is continuing to play a “critical role in the preservation of financial stability”, and therefore recommends greater involvement of the authorities in the preparation of the entity’s business plan.

The report that the IMF published on Friday focuses on analysing the weight that doubtful loans still play in the Spanish banking sector, which is still high despite the transfers that were made to Sareb when it was created.

In this sense, the international body echoes the initiative that the so-called “bad bank” has launched to give greater dynamism and transparency to the sale of loans, through an online platform, which is now operational, albeit in the pilot phase, on the company’s website.

Original story: El Diario

Translation: Carmel Drake

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