Spain’s bad bank transforms into real estate fund
Spain’s ‘bad bank’ is joining the ranks of the world’s biggest real estate funds as it swaps loans for property in an attempt to limit losses on toxic assets it took on during the financial crisis.
Sareb took over more than 50 billion euros (45 billion pounds) in real estate and other toxic assets from nine Spanish savings banks in 2012, part of a rescue deal as the government sought to try and draw a line under the country’s banking crisis.
Since the outbreak of the financial crisis in 2008, the number of Spanish lenders has shrunk to 12 from more than 55 and survivors have drastically streamlined operations and reduced their non-performing assets by 60% from a peak in 2013.
But Sareb is struggling, as a slump in Spanish real estate prices has depressed the value of loans and foreclosed assets it took on, despite Sareb buying them at the time at an average discount of 46% and 63% respectively.