SPAIN – Spanish banks have reduced the "doubtful" property-related loans on their balance sheet to 10.4%, according to data released this week by Spain’s central bank. But SAREB – the country's 'bad bank' – has yet to indicate likely pricing either for distressed loans or bricks-and-mortar assets.
The drop in balance-sheet liabilities is the result of 'group one' banks – BFA-Bankia, Catalunya Banc, Nova Caixa Galicia Bank-Banco Gallego and Banco de Valencia – transferring €36bn in assets to SAREB, primarily from foreclosed properties and non-performing loans to developers.
Despite the announcement of a "significant decline" in doubtful residential-related loans – from €191bn in November to €167bn in December – there is as yet no indication of pricing for the offloaded assets.
Pricing remains an issue because a significant percentage of the offloaded assets are development projects or land with questionable long-term value.
Housing dominates the portfolio of built assets, yet prices for residential units have fallen 36% from 2007 amid oversupply. The most recent official data suggested a year-on-year decline of 9.9% in 2012– a slight improvement on the previous year’s -10.5%, but a significant underperformance compared with most European countries.
The transfer of assets from the second group of banks is scheduled before the end of the first quarter, subject to the agency’s ability to raise €250m in new equity. A subsidiary of electricity firm Iberdrola, which announced last week that it had received planning permission for a €465m windfarm project in Scotland, is among the investors.
A consortium of Fortress, Centerbridge and Cerberus is understood to have expressed interest in committing capital, but discussions stalled over SAREB’s refusal to grant "implicit or explicit preferential rights".
