There has been a lot of talk lately about the Spanish Bad Bank SAREB and the amount of properties it has transferred onto its books from other struggling banks in Spain and the opportunity this presents for investors.
Setting up SAREB* has been part of the European financial assistance for bank recapitalisation, as agreed with the European Commission in 2012. It was set up to assimilate the property assets transferred by four nationalised Spanish financial institutions: BFA Bankia, Catalunya Banc, NGC Banco-Banco-Gallego, Banco de Valencia, although it doesn’t have a banking licence, so cannot lend money like other banks. SAREB will deal with institutions and not the retail, general public end of the market.
Spain seems to have the vast majority of measures agreed as part of this finance package well underway. This has provided an important boost to Spain, seemingly reducing the risk factor for investors in Spain.
Spain’s Banks-property and restructuring
However Spain’s central bank has asked the country’s lenders to re-examine more than €200bn in restructured loans that sit on their books. This is likely to force lenders to make additional provisions for future losses. N+1, the Spanish investment bank believes some banks have been relying on restructuring loans as a means of hiding losses.
Santander, BBVA and Caixabank, (Spain’s top 3 banks) have large amounts of restructured loans. In the case of Bankia, the nationalised lender, provisions could dent profits by about a third, says Nomura.
The biggest impact is likely to be on mid-sized lenders such as Banco Sabadell and Banco Popular which are likely to have to resort to asset sales to avoid a rights issue. This increases the pressure on sorting out their property portfolios.
SAREB – Spain Property Investors
SAREB has been in the news recently with a €200m deal expected for sale of properties to Private Equity buyers like Blackstone and Apollo. So does this indicate the start of landslide deals in Spain?
There is usually a wide gap between what is being quoted in the press and the reality on the ground. So whilst deals with Equity Houses or big investors might hit the headlines, the reality for individual investors might be quite different.
It will take a while for SAREB to get properly organised to market and sell its properties. Banks are not, after all, geared up as Estate Agents or Property Agents.
Investors buying Bank Repossessed Property in Spain
Banks selling their own repossessed stock prefer to sell volume deals, as opposed to one or two properties. As such they are more likely to deal with an intermediary or agent, who can feed through a number of deals regularly, rather than dealing directly with members of the public. Where individual sales might be possible, there is a lot of paperwork required and this can frustrate the process if the correct information or document is not supplied in a timely manner. Deals can be lost.
And the picture changes weekly, if not daily. When a bank is successful in selling some of its property stock, it then revises its prices and this can be upwards these days. So an investor might book a trip to buy a Holiday Home in Spain and then arrive to find it has gone up by €10,000 or €20,000.
Property Venture® works with a network of both local agents and banks, which means we can cut through to the reality of what is happening on the ground and keep you up to speed with which bank repossessions are good value and help work through the paperwork. And don’t forget, for all the talk of SAREB, the route for individual investors is still via individual banks and for this, local help will be invaluable to navigate the bank structure to find which person to deal with regarding property.
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* SAREB = (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria-Society for the management of assets proceeding from the reconstruction of the Banking System)Tags: AIPP, Bank Repossessions, European Union, holiday home, investment property, Overseas Buying process, Spain, Spanish Banks