Sareb Supports EBA’s Proposal To Create EU Bad Bank

7 February 2017 – Cinco Días

Last week, the European Banking Authority proposed the creation of a continent-wide bad bank and that initiative has now been approved by the European Central Bank. Brussels can also count on support from Spain, a country that, to a certain extent, has become an essential reference point following the rescue of the Spanish banking sector and the creation of Sareb, the national bad bank.

“The EBA’s proposals echo a lot of our experiences, as well as the lessons learned during the process”, says Íker Beraza (pictured above), Deputy General Director of Finance at Sareb (…).

Sareb allowed Spain’s banks to free themselves from non-performing loans amounting to €50,700 million. It is hoped that this will able to be replicated on a European scale. In Italy alone, NPLs amount to €276,000 million, and in France and Spain, the volume still amounts to more than €140,000 million. In total, Europe’s banks have more than €1 billion in doubtful loans.

The definitive clean up of these balance sheets has become an obsession in Brussels in recent months. And the plans to find the most appropriate way of doing this are accelerating. (…).

A working group between the 28 EU member countries, operating under the chairmanship of the French Treasury, has been debating for six months regarding possible solutions for putting an end to the crisis that is weakening the financial sector, reducing the availability of credit and hampering growth.

Like in previous phases of the crisis, the heated dispute between countries in the north and south is reducing the chances of reaching an agreement. But an air of urgency is starting to dominate and the EBA’s proposal has brought to light buried contracts, with the possibility of transferring up to €250,000 million in non-performing loans to the European bad bank.

Last Friday, high profile representatives from the European Commission, the ECB, central banks and Treasuries, attended a seminar, behind closed doors, regarding “the crisis of the non-performing loans”, organised in Brussels by the Bruegel study centre.

Beraza attended, on behalf of Sareb, as one of the most prominent speakers. “The EBA’s proposal is interesting and we can share important lessons that we have learnt since 2012”, said Beraza.

Beraza said that experience in Spain is proof that “the transfer of assets is a very efficient tool and that in Spain, to date, it has worked out 20 times cheaper than recapitalisation”.

Sareb’s Director considers that the creation of a similar entity on the European scale “would give the system the robustness it needs to handle crises, which have been shown themselves to be almost always systemic, as well as contagious from one country to the next”.

Sources at the European Commission say that the initiative could begin with a first step based on coordination between the national bad banks. The ECB is also keen to establish a common model upfront for the creation of all national banks in the Eurozone.

Moreover, the EBA’s proposal rules out the mutualisation of the potential losses of the European bad bank, which would be borne by the national authorities. This safeguard was introduced to stop Berlin from vetoing the project. (…).

“It is clear”, said Beraza, “that the bad bank model is here to stay in Europe, as an effective tool to be used in the time of crisis”.

Original story: Cinco Días (by Bernardo de Miguel)

Translation: Carmel Drake

Sareb Will Receive €177M From Its Asset Managers In June

16 June 2015 – Cinco Días

Haya, Solvia, Altamira and Servihabitat must pay Sareb €177 million before 30 June 2015 to make good the total amount (€588.6 million) that they agreed to pay as a deposit for taking over the management of the bulk of the bad bank’s assets. The asset transfer has already been completed in the case of Sabadell’s platform and will be completed this year for the remainder.

Sareb is immersed in the so-called “Project Híspalis”, the transfer of the management of 169,461 assets worth €48,200 million to four real estate platforms, which won the tender opened by the bad bank last December to professionalise the marketing of its assets.

The four platforms are: Solvia, the real estate arm of Banco Sabadell; Haya Real Estate, the platform created by the fund Cerberus to manage the property portfolio that it was awarded by Bankia; Altamira, in which the fund Apollo holds a 85% stake following its purchase from Banco Santander; and Servihabitat, the real estate arm of CaixaBank, in which the fund TPG holds a 51% stake. On the basis of the commercial agreement signed, these four firms must pay Sareb €177 million before the end of the month.

This is the last outstanding payment of the total amount (€588.6 million) that the four platforms agreed to pay Sareb as collateral for the contract awarded. The asset managers will recover these funds, together with the commission agreed, as they begin to fulfil the sales objectives that were set.

The four companies had already paid €411.85 million by the end of last year and according to Sareb’s annual accounts, they must pay “the outstanding amount no later than 30 June 2015”. Although this income would represent a significant boost to Sareb’s results, which has recorded losses in each of the last two years and is awaiting (the publication of) an accounting circular, the company has stated that it will set this income aside given that, sooner or later, it will have to return it.

The assets transferred have more than four million documents associated with them and involve the hand over of 352,000 keys – a complex operation involving 200 people from Sareb and one thousand people from the management platforms. Hence the handovers are happening progressively and, according to sources close to the process, will not be completed until at least the autumn and in some cases, until the end of the year.

(…)

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake