#spainbadbank

What is Sareb?

Sareb is Spain’s “Bad Bank”; it is a private entity which was created in 2012 to help clean up problems in the Spanish banking sector created by excessive lending to the real estate sector. With the help of Sareb the Spanish banks receive financial aid from European partners. Banks in financial difficulty can transfer their real estate assets (80% loans and 20% properties) to the Sareb management company reducing the bank’s risk of associating with assets and then the bank can continue with its business. Sareb has received nearly 200,000 Spanish assets from banks since its establishment; the assets are worth approximately 50.781 billion Euros.  Banks which have transferred assets to Sareb include Catalunya Banc, Bankia, Banco de Valencia, Liderbank, Banco CEISS, BMN, NCG-Banco Gallego and Caja3. Sareb follows a strict business plan which maps out the organization’s activities for Sareb’s maximum lifespan of 15 years. During that time Sareb will sell off and refinance the assets in order to make a profit for its share holders. The shareholders include those who put up capital from the private sector (55%) and 45% of the shares are owned by the Fund for Orderly Bank Restructuring (FROB). The shareholders include 14 Spanish banks; 2 foreign banks; 10 insurance companies and FROB. Sareb plans to turn a profit through retailing the properties, diversifying the distribution of properties, selling to investors, compiling portfolios to fit a specific investor’s profile and the selling to professional investors.

The Bad Bank Sells Madrid and Barcelona Properties

This month Sareb launched a campaign to sell off more than 1,300 properties in Madrid and Barcelona. It is natural that these properties will be sold at below market price and so they provide a good investment opportunity for buyers.