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5 September 2016 – El Mundo
This summer, Sareb has taken advantage of the fact that savers have limited alternative investment options and that its assets are well priced…to boost property sales. (…).
Unlike other commercial companies, the aim of Sareb (in which the State holds a 45% stake) is to reduce its balance sheet by selling off all of its assets, which primarily comprise non-performing or risky real estate loans and involve more property developers than individual borrowers, inherited from the former troubled banks.
In this case, the typical clients of the company chaired by Jaime Echegoyen (pictured above) are large financial investors specialising in generating profits from assets that the banks are unable to maintain. Nevertheless, with the activation of demand in the second-hand real estate sector, the bad bank is trying to take advantage of every opportunity and in April it put 2,237 homes up for sale (to private investors) along the coast.
The commercial objective is much lower and the bad bank does not intend to liquidate 100% of its supply. Nevertheless, between sales and reservations, the company has managed to offload 330 homes this summer for a total amount of €31 million, which represents a 25% increase with respect to its budget. The company has not revealed the prices at which it acquired these assets from their original owners.
Sareb, which uses sales companies belonging to or related to Bankia, Banco Sabadell, CaixaBank and Santander, will extend the campaign that it launched in April by at least another month to try and maximise the returns from savers interested in acquiring properties at good prices. The prices of the homes put up for sale in 20 provinces across nine autonomous regions started at €32,000 for a flat in Torrevieja (Alicante) and went up to €866,000 for a 342 sqm family home in Calviá (Palma de Mallorca) with five bedrooms, four bathrooms and a swimming pool.
Neither of those properties have been sold yet. Half of the homes in the portfolio are located in Valencia, where several now extinct entities, such as Bancaja (Bankia) and Caja de Ahorros del Mediterráneo (CAM, nowadays part of Banco Sabadell) undertook very intense activity in the run up to the burst of the real estate bubble. Specifically, the province with the highest number of properties up for sale is Castellón, with 791 homes. (…).
Last year, Sareb owned 105,000 properties, 80,000 loans and 375,000 collateral properties. Nevertheless, the Bank of Spain issued new regulations, which come into force in October, requiring the bad bank to individually value each asset on a regular basis using a methodology validated by the supervisor; that forced the bad bank to update the value of all of its assets. Sareb was thus required to perform an additional clean up amounting to €2,044 million, an operation that followed other similar measures already undertaken in 2013 and 2014, amounting to €968 million.
For that reason, the entity needed a recapitalisation, which its shareholders undertook converting €2,170 million of subordinated debt into capital, which it used to finance the acquisition of toxic assets from the rescued banks. (…).
Original story: El Mundo
Translation: Carmel Drake