Tag: convertible subordinated debt

Sareb Expects Its Business To Normalise By Start Of 2016

20 October 2015 – Expansión

Sareb is close to restoring the cruising speed of its business. That is what its President, Jaime Echegoyen, confirmed yesterday before the Senate’s Finance Committee: “From what we are seeing and given the pressure we are exerting to ensure that the migration of assets (to the new managers: Haya, Altamira, Servihabitat and Solvia) is completed as quickly as possible, I think that we will be back to providing a normal level of service by the first quarter of next year”.

This (migration) process caused Sareb’s turnover to drop by 10% during the first half of 2015. Echegoyen confirmed that the arrival of the new managers is already being felt in the second half of the year, despite the fact that the handover will not conclude until the beginning of 2016: “During the second half of the year, we are already in a much better position to fulfil our objectives and undertake our commercial activity than we were during the first half, and that will all be reflected in the numbers”, he said.

The transfer of assets was one of the points of interest during Echegoyen’s appearance in the Senate, together with the new accounting circular pursuant to which Sareb will have to make extraordinary provisions at the end of the year.

“In the likely event that capital requirements arise, the company has €3,600 million of convertible subordinated debt, which is more than sufficient to meet the requirements of the accounting circular”, explained Echegoyen. In response to questions from members of parliament, the President of Sareb went even further and said that “these own resources are sufficient to enable the company to fulfil its mandate and its business plan over the remainder of the entity’s twelve year life”.

Social housing

Echegoyen also used his appearance to announce that Sareb will double the number of homes available for social purposes, from 2,000 to 4,000, through the agreements it has in place with several autonomous regions and town halls, such as Madrid and Barcelona.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Echegoyen Confirms That Sareb Will Have To Convert Debt

20 October 2015 – Expansión

The President of Sareb also announced that the entity will increase the number of social housing properties (from 2,000) to 4,000.

Yesterday, at a meeting of the Senate’s Finance Committee, the President of Sareb, Jaime Echegoyen, discussed the recent developments to affect the so-called ‘bad bank’, which announced its results for the first half of the year last Friday, reporting a reduction in losses of 23%.

Echegoyen confirmed that the application of the new accounting standards, defined by the Bank of Spain’s Circular published in September, will affect the solvency of Sareb. The new standards require Sareb to assign an individual market value to each one of the entity’s assets, with the consequent need for new provisions. However, the President confirmed that the group’s convertible subordinated debt, amounting to €3,600 million, will be more than sufficient to cover this eventual hole in its solvency.

The senior executive of Sareb also acknowledged that the hiring of third parties to manage the asset portfolio slowed down sales processes during the first half of the year, due to the complexity and length of time involved in the process to materially transfer the management of those assets. Nevertheless, he appeared confident that the cruising speed of sales will be recovered again during the second half of the year.

During the first half of the year, revenues decreased by 10%.

When questioned by several senators about the hedging swap contracted by Sareb in 2013, Echegoyen explained that this contract would mature in 2022. Until then, all profits and losses associated with it are “theoretical”, since the actual result will only be known upon maturity. Nevertheless, the banker commented that during the first half of the year, the contract generated theoretical gains of €400 million.

Social housing

Echegoyen also used his appearance to announce that Sareb has increased its stock of social housing available to autonomous regions from 2,000 to 4,000 homes. That means that the bad bank is making available an additional 2,000 homes to the regional administrations.

Currently, Sareb has collaboration agreements in place in Cataluña, Aragón, Galica, País Vasco and the Balearic Islands and is waiting to sign two more in the Canary Islands and Castilla y León. The President added that the entity is also in advanced talks with Castilla La Mancha, Valencia, Cantabria and Madrid and he announced that discussions have also begun in Andalucía, Asturias and Extremadura.

Original story: Expansión (by M.R.)

Translation: Carmel Drake