EUROPE – Insurers Generali and Zurich have become shareholders in Spain’s bad bank, each investing €5m in subordinated debt positions as state-owned Sareb paid four banks €14m for a second tranche of distressed property debt.

The Italian and Swiss insurers’ participation will be seen as an additional vote of cross-border confidence in Sareb following an earlier €2m contribution from AXA, even though a significant percentage of the bank’s assets – including early-stage residential development projects an undeveloped land – could prove difficult to shift.

The bank claims the move will move it further towards its twin aims of attracting more private participation in its capital structure – currently at 55% – and “a large presence” of overseas investors.

Domestic insurers Reale and Santa Lucia are also acquiring debt in the bank this week.

The debt issue will give Sareb total equity of €4.8bn – enough, it says, to cover the handover this week of distressed assets from ‘Grupo 2’ banks Liberbank, Caja 3, BMN and CEISS.

In return for the assets, the four banks will collectively receive €14m in senior debt scheduled to mature in three tranches between 2014 and 2016.

The first tranche, in December, involved the transfer of assets from Grupo 1 banks BFA-Bankia, Catalunya Banc, Nova Caixa Galicia Bank-Banco Gallego and Banco de Valencia in return for €36bn.

According to Sareb, it now controls assets worth €55m.

But some would-be investors have questioned whether there has to date been adequate pricing transparency on the majority of sellable assets, pointing out that investors know what Sareb has paid for them but not necessarily what it will sell them for.

So far, the bank has applied a 63% discount on foreclosed assets and 45.6% for loans.

By asset type, Sareb has applied a 54.2% discount on new housing, 63.2% on development and 79% to land.