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

S&P: Banks Will Sell Off €35,000M In Toxic Assets In 2017

25 January 2017 – Cinco Días

S&P Global Ratings is convinced that there is going to be a new wave of M&A activity in the Spanish financial sector, as a result of the low return environment, which is putting downwards pressure on banks’ margins, and the rising regulatory costs.

The high volume of non-productive assets on the balance sheets of most entities is also having a negative impact on their accounts, which is pushing them towards mergers, said the Director General of Financial Institutions at S&P, Jesús Martínez, yesterday. The Director considers that these consolidation processes will help smaller entities improve their returns.

The Bank of Spain and most of the major financial institutions in Spain share this idea and are convinced that there will be a second round of mergers over the medium term. These mergers will join the one that Bankia and BMN are likely to complete in July.

In its forecasts for the year ahead, the ratings agency considers that the Spanish financial sector will be supported by the “robust” economic recovery that is happening in Spain at the moment, as well as by the improvements that are being seen in employment and in the real estate sector. It believes that the latter is key for the improvement of banks’ yields. In fact, it thinks that the banks will manage to considerably reduce the property they hold on their balance sheets this year, decreasing the balance from €183,000 million at the end of 2016 to around €148,000 in 2017.

This is the first time that the foreclosed asset balance will fall below its 2010 level (€175,000 million), according to data provided by S&P.

Non-productive assets in the Spanish banking sector peaked at €320,000 million in 2012 if we take into account the foreclosed assets that were transferred to Sareb by the nationalised bank. In 2016, the volume of foreclosed assets decreased by around €37,000 million, according to S&P. Between 2016 and 2017, the total decrease is expected to amount to around €70,000 million.

Nevertheless, the ratings agency warns that the sector will be affected by certain risks resulting from the crisis, such as the high volume of non-productive assets that the entities hold on their balance sheets, or the difficulties involved in increasing returns given the very low interest rates that are putting pressure on margins in the income statement.

Despite that, the agency considers that the banks may continue to offset this decrease in returns and the pressure on margins through the lower provisions that they are having to make, as a result of the reduction in non-productive assets, which is expected to continue over the next few years. S&P forecasts that the risk outlook for the financial sector will decrease, which will cause it to review its ratings. (…).

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

UniCredit Sells €17,700M In Doubtful Loans To Pimco & Fortress

15 December 2016 – Expansión

The Italian bank has €360,000 million of doubtful loans on its balance sheet.

UniCredit, the largest bank in Italy, has taken its first major step in the long awaited clean up of the transalpine financial sector, with the sale of €17,700 million in doubtful loans to Pimco and the Fortress Investment Group. Experts believe that Italy’s other financial institutions will find it harder than UniCredit to clean up their balance sheets.

Massimo Famularo, analyst at Frontis, considers that “UniCredit is playing in a league of its own and its capacity to absorb losses is enormous compared with that of the smaller Italian banks”, reported the Bloomberg news agency.

The sale of doubtful loans forms part of UniCredit’s new strategic plan, which also includes a €13,000 million capital increase and the cutting of 14,000 jobs. “The inclusion of Pimco and Fortress in the sale agreement for the doubtful loans gives credibility in the market and encourages other players to make the step forward”, says Federico Montero, analyst at Evercore Partners, referring to the other Italian financial institutions with doubtful loans on their balance sheets.

UniCredit will divest these doubtful debt portfolios at a discount of 77%. That is higher than the 73% discount at which another one of the Italian banks in distress, Monte dei Paschi di Siena, is planning to sell its doubtful loans, amounting to €28,000 million, to Atlante, the Italian state fund for the bail out of the financial sector.

On average, Italy’s banks are valuing their doubtful debt portfolios on their balance sheets at a discount of 57%, according to data compiled by Reuters. UniCredit’s share price fell by 6.4% on the stock exchange (yesterday) and has fallen by 48% so far this year.

Monte dei Paschi

Monte dei Paschi, the oldest bank in the world and the third largest in Italy, confirmed yesterday that the ECB has rejected its request to extend its capital increase amounting to €5,000 million until the middle of January. The entity’s Board of Directors met yesterday and will convene again today to announce their definitive plan, according to sources quoted by the Reuters news agency. The market takes it for granted that the entity will need public aid for its recapitalisation.

Original story: Expansión

Translation: Carmel Drake

Sareb Puts 1,100 Homes Up For Rent In 20 Provinces

13 December 2016 – Público

On Monday, Sareb put around 1,100 homes up for rent, located in approximately twenty Spanish provinces. Most of the properties are new builds, but there are also some second-hand homes in the portfolio.

“The company is aware of the increasing demand in the rental market from different groups, such as young people, and it is trying to contribute to the growth in the availability rate of homes, through initiatives such as this one”, said Sareb in a statement.

The company has said that it intends to boost the rental of homes with the aim of avoiding their deterioration, covering their costs and facilitating their sale in the future, in order to fulfil its divestment mandate.

The assets are located in the provinces of: Alicante, Almería, Badajoz, Barcelona, Castellón, Ciudad Real, Cuenca, Girona, Guadalajara, Huelva, Lleida, Madrid, Málaga, Murcia, Pontevedra, Sevilla, Tarragona, Toledo, Valencia and Zaragoza.

Sareb, which was constituted at the end of 2012 in return for aid amounting to €41,300 million granted by Europe to the Spanish government to rescue the banking sector, has played a key role in the clean-up of the Spanish financial sector, by allowing those banks that received public help to transfer assets amounting to around €50,000 million to the vehicle.

Original story: Público

Translation: Carmel Drake

Anticipa Evaluates Purchase Of Sareb’s Large RE Debt Portfolio

8 November 2016 – Expansión

The real estate manager Anticipa Real Estate, a subsidiary of the US fund Blackstone, has expressed its interest in acquiring a portfolio of 200 non-performing loans worth €1,000 million, which the bad bank Sareb put up for sale last month.

It is the largest real estate debt portfolio that the Spanish bad bank has put on the market in its three and a half years of life. Sareb hopes to sell the portfolio in its entirety to a single buyer, and it is expected to award it through a competitive process that will be completed at the end of 2016 or the beginning of 2017.

In an interview, the CEO of Anticipa, Eduard Mendiluce, said that the company has not yet submitted a binding offer for the portfolio, which was put up for sale just three weeks ago, but he confirmed that his firm intends to analyse the portfolio because it is very attractive.

Mendiluce commented that in the last twelve months, no large real estate portfolios have come onto the market, which he explained was due to the crisis in the financial sector, which “needs time to absorb the provisions required for foreclosed assets and non-performing loans before those assets can be sold”.

Anticipa, which has starred in some of the major operations undertaken in the sector in recent years, such as the purchase of a portfolio of non-performing mortgages from CatalunyaCaixa and the purchase of a portfolio containing property developer loans from Sareb, currently manages around €10,000 million in problem loans and owns a stock of 5,000 homes.

All of these properties have come into its possession as a result of “daciones en pago” – when the owner hands over the home to pay off his outstanding debt – and 70% of them are currently being leased out.

In fact, one of Anticipa’s objectives is to become a leading manager in the rental market in Spain.

In this sense, Mendiluce has called on the different governments to launch a “clear and convincing” aid program to support the rental market (in Spain) and place it at the level of other countries in Europe, where this way of accessing a home is much more widespread.

For example, the Director is proposing tax incentives for families who choose to rent, for renovations and for people who are unable to pay market prices.

“In short, a set of measures that incentivise private operators to back this market as an alternative for investing and managing a supply of competitive and high-quality homes”, he said.

Mendiluce added that as “large, stable and solid” companies emerge with a stock of high-quality and attractive homes for rent for families, so demand will consolidate in Spain, just like it has done in other European countries, such as Germany and United Kingdom, where several large, listed and unlisted, companies operate with thousands of rental properties on their balance sheets.

“In addition to the aspects of professionalisation of the sector and improvements in techniques and procedures, we need a dedicated aid program to support rental housing from the central, regional and local governments”, he said.

Anticipa is based in El Prat de Llobregat (Barcelona) and currently employs 303 people.

Original story: Expansión

Translation: Carmel Drake

Bank Lending To Individuals Peaked In April

8 June 2016 – Expansión

The banks are stepping on the accelerator to sign new loan contracts. In April, the rate of new mortgages and consumer loans granted by Spanish financial institutions reached levels not seen since before the rescue (of the sector) in 2012. Nevertheless, new operations to large companies declined during the month, which meant that the total volume of new loans granted in April decreased by 7.9% to €34,600 million, according to data from the Bank of Spain.

In this way, Spain’s banks are clearly focusing on three areas to secure new business and whereby improve their returns:

1. Mortgages: the volume of new mortgages to buy homes amounted to €5,173 million in April, twice as much as last year and the highest monthly figure since December 2012. Even so, that figure does include renegotiations. If we exclude those, the amount of new money granted for mortgages during April amounted to €2,920 million, i.e. 45% more than during the same month last year and the second highest monthly figure in the last year. The banks hope to offset the low profitability of the mortgages granted during the years of the real estate boom with these new mortgages.

2. Consumer credit: Another segment that the financial entities are pushing hard is that of consumer credit, in light of the high interest rates being offered (c. 7.52%), according to the latest figures from the Bank of Spain. In this way, the financial sector granted €2,330 million of new financing to consumers in April, almost 50% more than a year earlier and the largest volume since May 2010.

3. SMEs: The financial sector is also focusing on its business with SMEs, where the banks are waging a battle to secure new clients. Nevertheless, the loan volumes there did not reach record levels in April – €11,710 million was granted, which was 14% more than a year earlier, but lower than the figure in December – like in the cases of mortgages and consumer credit, but the price at which new loans are being granted did, averaging 7.52%, the lowest level seen in recent months.

However, the banks have encountered a more complex panorama in the market for medium-sized and large business. Regarding the former, the volume of new loans grew by just 4% in April, whilst in the case of the later, the volume of loans granted declined by 40%. According to Fernando Alonso, Director of Companies and Corporations at BBVA, speaking in a recent interview, the “political uncertainty may well be delaying investment decisions at the corporate level”.

For the first time, the Bank of Spain provided data about renegotiations in its figures for April; it also gave details about loans to companies by amount; deferred credit card payments – also at record highs -; and overdrafts to households and companies.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Losses From The Banks’ RE Arms Rose By 11% To €3,266M

14 March 2016 – El Economista

The banks’ real estate arms are still weighing down on the accounts in the sector. Despite the economic recovery and the improvement in prices, the property development companies owned by the financial entities recorded more losses last year than in 2014. Specifically, according to the available data, their combined losses increased by 11% to €3,266 million.

The reasons for this deterioration are the facts that: the volume of assets on their balance sheets is still growing, which means higher provisions, and that divestments are being made at prices that do not even cover management costs and taxes.

Homes and land are still moving onto the balance sheets of the banks at a high rate. In this way, the largest groups (Santander, BBVA, Bankia, CaixaBank, Sabadell and Popular) increased the volume of homes and land they own by 8% in 2015 to €62,163 million, before provisions and valuation adjustments.

In this context, the main owners of these assets are suffering from huge losses and are not forecasting to make any profits until 2017, at least. Everything will depend on the evolution of the economy over the next few months and the recovery of both real estate transactions and prices. In 2015, for the first time since the crisis began, house prices rose.

The real estate company that recorded the highest losses was the property arm of CaixaBank, which is one of the largest. BuildingCenter generated negative results of €1,427 million in 2015, which represented an increase of 11.4% compared with 2014. In the middle of last year, CaixaBank had to inject €1,600 million into its subsidiary to restore its equity. (…).

Although the property developer owned by the Catalan group suffered the greatest losses, the two main property developers owned by Ibercaja saw the highest rises  in their losses. Cerro Murillo and Inmuebles CAI’s losses shot up by 212%, due to the poor performance of the latter, which was inherited from the former Caja3. The losses of both companies amounted to €203 million in total. Ibercaja is trying to accelerate its sales and improve the administration of its real estate assets….to this end, it has sold its home and land management platform to Aktua, in an operation that will generate profits of €70 million for the entity.

Ibercaja was one of the few entities that had not sold its platform. BBVA and Sabadell are the only others that have not sold theirs yet either; they are retaining this administration in-house for the time being.

In fact, BBVA was one of two entities that managed to reduce the losses generated by its real estate arm. The two companies that own its homes and land, which operate under the name Anida, decreased their losses by 22.2%, to €658 million. In part that was due to the fact that the group, chaired by Francisco González managed to sell some of its assets with gains. (…).

The other developer that managed to reduce its losses last year was Liberbank, but its situation is different from those facing other players in the majority of the sector, given that the entity transferred the bulk of its assets to Sareb as part of the financial rescue plan and the properties it inherited from the former CCM are covered by the Deposits Guarantee Fund, up to a maximum of €2,475 million.

Some entities have tried to sell sizeable batches of properties, but these projects have been suspended or delayed due to the political uncertainty in Spain following the general elections and due to the instability in the market due to the slow down in China and the fall in the oil prices.

In this context, the banks will intensify house sales through their branches to individual buyers. One of the most ambitious projects has been proposed by Popular, which seeks to sell homes worth more than €2,800 million in 2016, as part of a plan to get rid of up to €8,000 million non-performing assets, through various means, to improve profitability.

Popular’s real estate arm, Aliseda, increased its losses by 13% in 2015, to €165 million. (…).

Original story: El Economista (by Fernando Tadeo)

Translation: Carmel Drake

Moody’s: Banks Still Exposed To High Volume Of Foreclosed Assets

12 May 2015 – Expansión

The US ratings agency Moody’s warned yesterday that Spanish banks still have a lot of foreclosed real estate assets (on their balance sheets), which are continuing to put pressure on the real estate market and are weighing down on the credit profile of the financial sector.

In its weekly report, published yesterday, Moody’s explained that with the exception of the transfers that some entities have made to the Asset Management Company for Bank Restructurings (Sareb), the stock of foreclosed properties on the balance sheets of Spanish banks has increased steadily since the start of the financial crisis in 2008. “The (volume of) foreclosed assets is increasing even though the health of the Spanish economy and its banks has started to improve”, said Alberto Postigo, Senior Analyst at Moody’s.

In his opinion, the banks are avoiding selling assets at losses and are waiting for the market conditions to improve significantly. “Although the Spanish real estate market experienced a slight improvement last year, with a 22% increase in the number of homes sold compared with the previous year, and property prices have now stabilised following several years of decreases, the recovery is not yet sufficiently strong to reduce the stock”, adds the expert.

Main factors

According to the Moody’s analyst, a variety of factors still persist, which are weighing down on the recovery of the real estate sector. These include high unemployment, a shrinking population and a huge stock of empty homes that the market is slowly absorbing.

Finally, the agency has points out that the exposure of Spanish banks to real estate assets, which include properties, as well as secured loans granted to construction and real estate companies, amounts to approximately €300,000 million. Real estate assets amounted to €83,400 million in total in 2014.

 Original story: Expansión

Translation: Carmel Drake

Top 6 Banks Lose €15,300M From Real Estate In 4 Years

10 March 2015 – El Economista

The real estate sector continues to be a major problem for financial institutions despite the economic recovery. The largest 6 banks lost another €3,027 million last year from their main property development companies, which together hold the bulk of the foreclosed assets, due to unpaid loans.

Following the results reported in 2014, Banco Santander, BBVA, CaixaBank, Sabadell, Popular and Bankinter have now suffered losses of more than €15,300 million in the last four years from their real estate arms.

Nevertheless, the rate of loss is shrinking due to the stabilisation of (house) prices, which have decreased by 40% on average, and the increased sales of homes and, even land. This is in addition to the provisions that have already been made, primarily in 2012, when the Government forced financial institutions to increase their coverage ratios substantially in the face of doubts in the market over the real status of the system’s balance sheet.

Thus, the deficit reported by these companies decreased by 36% with respect to 2013 and by 45% with respect to 2012, but it continues to be 43% higher than in 2011.

The real estate arm of CaixaBank, BuildingCenter, recorded the greatest losses in 2014, according to data published by the entities. Specifically, it generated a loss of €1,280 million. The Catalan group had to clean up its balance sheet by €1,900 million in the middle of last year, through a capital injection to adjust its balance sheet. Its losses have amounted to €3,000 million in the last two years.

Diminishing impact

Indeed, the Catalan group is the least optimistic about the property situation in our country. At the end of January, its CEO, Gonzalo Gortázar, predicted that the accounts of the real estate company “would continue to be significantly impacted” this year and next. Although, he did point out that the impact should diminish.

Canvives, owned by Popular, was the property developer that recorded the smallest losses: €52 million. The company, which used to be owned by Pastor, was merged into the group chaired by Ángel Ron. The deficit of this subsidiary has decreased by 91% in two years after the clean up. Popular holds another large real estate company in its portfolio, Aliseda, which generated additional losses of €146 million last year.

According to its management tem, Popular managed to sell property at a price slightly higher than its book value, after applying provisions, and it doubled its turnover (from this activity), to generate €1,500 million.

The bank, chaired by Ángel Ron, expects to increase the sale of property by 33% this year, as it gradually reduces this type of asset. It was the last entity to launch an aggressive price policy and it is intensifying (its efforts) to reduce the volume of homes and land it holds.

Santander’s property developer generated the some of the smallest losses last year. Just €119 million. This company’s deficit over the last four years amounts to €1,788 million in total.

Santander, like Popular and CaixaBank, is supported by funds, which strengthen the sale of their properties. The three banks have got rid of the majority of the capital (they held) in the platforms they use to manage this type of asset, with the objective of outsourcing the service and achieving gains with which to shore up their capital resources.

The strategy followed by BBVA, Sabadell and Bankinter is somewhat different; they have retained the overall management of their foreclosed properties, although in the case of the first two, the option of finding a specialist industrial partner has not been ruled out. Under no circumstances do these entities expect to partner up with any funds.

The volume of foreclosed assets increases

Although the volume of sales has accelerated, the balance of foreclosed assets is continuing to increase; although if we exclude the stakes held in property-related companies, this balance decreases for the first time since the crisis. In this sense, last year, Santander and BBVA succeeded in reducing the volume of homes and land in their portfolios. The former reduced its balance by 1.8%, to €7,851 million gross (excluding provisions), whilst the latter decreased it by 5%, to reach €13,016 million.

The six listed banks, excluding Bankia, which transferred the majority of its properties to Sareb during the financial bailout, together held foreclosed assets amounting to €70,000 million at the end of 2014, including the stakes they owned in property development companies. This means that the balance had increased by 9% with respect to 2013.

The forecasts made by the entities themselves indicate that all of this stock will have been liquidated within five or six years. Santander, for example, expects to decrease its balance by 20% each year, which means that it may have got rid of the entire volume of homes and land in its portfolio within five years. However, this will all depend on the economic conditions in our country and the recovery of the property sector, which is starting to see the light at the end of the tunnel.

Original story: El Economista (by Fernando Tadeo)

Translation: Carmel Drake

Big Banks Record Losses Of €3,600m, Hit By Real Estate

9 February 2015 – El Mundo

The Ibex-listed financial institutions have doubtful balances and a portfolio of foreclosed homes amounting to €120,000 million.

During 2014, they sold more than 20,000 properties for a combined value of €11,700 million.

It will take Spanish banks two more years to “digest” the property binge that they enjoyed during the years of economic boom. The annual accounts of the listed entities – with the exception of Bankia, which has not yet published its results – show that, despite the recovery in the banking sector, the real estate sector continues to be a heavy burden – it generated losses of more than €3,600 million in 2014.

The indicators show signs of optimism, including the decrease in the default rate – which currently stands at 12.75% for the sector as a whole – and the decrease in doubtful assets by more than €20,000 million over the last year. However, the banks recognise that their exposure to the real estate sector will continue to be a hindrance throughout 2015 and 2016 at least, two years during which the market is expected to absorb most of the foreclosed assets (amounting to €60,000 million) accumulated by Santander, BBVA, Caixabank, Bankia, Sabadell, Popular and Bankinter.

The gross credit exposure to developers of these seven entities (all of which are listed on the Ibex) amounted to €103,000 million at the end of last year, although it should be noted that the figure for Bankia relates to the third quarter 2014.

From this quantity, just over €61,000 million is classified as doubtful (i.e. a non-payment of some kind has been recocorded) or sub-standard (credits that are currently being paid, but which are expected to go into arrears). According to the entities, this figure is lower than last year, due to the refinancings, recoveries and maturities that have taken place over the last year. But it is still a volume that requires a significant provision balance to cover the potential losses. Overall, the seven banks analysed recorded a total coverage against doubtful debts of €38,900 million at the end of 2014.

Last year was the first year in which the entities significantly reduced their provision coverage, following five years of crisis. “The results from the real estate sector clearly show the less negative impact that has resulted from the clean up of loans to developers and foreclosed real estate assets” says BBVA, a bank that recorded losses of €876 million in this area. Despite the size of the figure, it is 30% smaller than the €1,252 million losses recorded by the entity a year earlier.

Caixabank is the entity whose results have been hardest hit by the activity in the real estate sector. On 30 January, its CEO, Gonzalo Cortázar, predicted that the housing burden would have an impact on its financial results in 2015 and 2016 that this impact would “still be significant, although the digestion will be prolonged on a decreasing scale.

Santander has managed to reduce its loans to developers by 34% in the last year and has increased its coverage to 54%, but its annual results are still negative, with the entity led by Ana Botín recording a loss of €583 million.

Sabadell’s losses were even greater – €999 million and it has a gross exposure to the real estate market of €26,958 million, the highest in the sector, taking into account the foreclosed assets of CAM.

Fewer discounts

Bankia, Bankinter and Popular do not publish results about their respective real estate businesses. Popular is the bank that holds the greatest number of problem assets (doubtful and foreclosed assets) in proportion to the size of its balance sheet. It has loans amounting to €13,061 million in this category, with a coverage level of 44%. But the figures that really jump out are the volume of foreclosed homes, developments and land (€14,169 million) held by the entity, which closed the year with sales of €1,503 million.

Last year, some entities sold some of their house sale divisions. Altogether, these seven entities offloaded more than 20,000 units for a total value of €11,700 million. Sabadell was the most active bank in terms of house sales, generating €2,744 million. Various sources agree that 2014 was characterised by a reduction in the discounts applied, which in some cases, meant that the income received was actually higher than the recorded book value.

Some entities, such as BBVA and Sabadell, have an Asset Protection Scheme (Esquema de Protección de Activos or EPA) in place, following their acquisitions of Unnim and CAM, respectively. This insurance allows them to cover any additional deteriorations on their balance sheets over the next few years, through the Frob. Sabadell has recognised that it may start to use this financial cushion this year.

With the exception of Bankia, none of these companies has transferred assets to Sareb, the bad bank that absorbed loans to developers, and foreclosed homes and land, from entities that received public aid in the rescue of 2012.

Original story: El Mundo (by Javier G. Gallego)

Translation: Carmel Drake