“Bad Bank” repo stock estimated by region

Most of the stock of repossessed homes taken over by Spain’s “bad bank” will be in just 4 regions, according to press reports.

Spain’s so-called “bad bank” (proper name Sareb), set up to take over the real estate assets of Spain’s nationalised banks, will have its biggest challenges in Catalonia, the Valencian Region, Madrid, and Andalucia, which will account for 66pc of it’s repossessed stock between them (see table above).

Originally valued at around 18 billion Euros in total, some 75pc of the assets will be categorised as “illiquid” or hard to sell, say press reports. Many of them will have been built in coastal areas with foreign holiday-home buyers in mind.

More like a colossal real estate company than a bank, the Sareb could struggle to attract buyers and compete with other banks if it is not in a position to offer mortgage financing, warns a recent report from the European Commission. “Spanish banks will probably prove big rivals for the Sareb, as the majority of them already offer favourable financing terms to buyers of their real estate assets,” explains the report. “Unless the Sareb can offer similar financing conditions to its clients through financing deals with banks, it will find it more difficult to sell its assets.”

Thoughts on ““Bad Bank” repo stock estimated by region

  • Hmmm!
    I reckon that Sareb will indeed struggle to dispose of their recently-acquires property portfolio.
    Floating around numerous urbanisations, one could always pick out the “re-po’s”, as there was invariably a huge sign stating “100 mortgage available”.
    If Sareb have no mortgage funds of their own, what CAN they do with these huge numbers of properties?
    Try to sell them to an investment company for whatever they can get?
    Refer any potential buyer back to the bank that originally re-possessed the property for their mortgage – now there’s a thought?
    And OBVIOUSLY, the banks who are still “stuck” with their property portfolio, will direct their own limited funds to financing buyers for ther own stock of properties.

    Has this been properly thought out?
    I personally would have ensured that Sareb would have had unlmited access to mortgage funds – wherever they came from.
    There’s no point in owning properties when there’s a mortgage famine.
    I say again, Hmmm.

  • Interesting statistics, how keen are the Banks to give a mortgage, and how keen are they to discount against cash.

  • If it has been ‘seriously thought out’ then Sareb was designed simply to be a dumping ground for properties that are almost impossible to sell. The banks get to keep the properties with a value of less than 100k (i.e. anything with an original mortgage of 200k but acquired at auction) or a loan of 250k (i.e. almost any other desirable finished property) and the bad bank gets the unfinished resorts, the now worthless development land and the zombie urbanisations – plus some commercial property that no one is interested in. Even if they can privatise Sareb, i.e. get private investment for more than 50% of the shares, they can pretend that this is not public debt for a while. But the State still has to respond to the EU for the money it borrowed, so the taxpayer will still pick up the bill.

  • Hi Bede,
    For “taxpayer” picking up the bill, how about the EU?
    To my mind, there’s either adequate funds available from “somewhere” to shift all of these properties (even if it does take 7-10 years) or there isn’t.
    It all seems rather akin to sticking all of one’s (very)bad eggs in one basket – but on whom is Banco Malo going to dump them?
    On a local urbanisation that I regularly visit, there are a considerable re-po’d properties advertised for 20% of what they were originally marketed (& sold) at – but although the price keeps progressively being reduced, there’s still no buyers.
    The Spanish government DO NOT seem to have woken up to the fact that there’s much more chronically wrong with the housing situation, than just the prices.
    One buyer who’s been ripped off (and there’s hundreds of thousands of thise) do much more damage by relatng their experiences.
    It all comes back to caveat emptor, and will continue so to do until the rest of the sickness associated with Spain & buying a property there, is resolved.

  • Campbell D Ferguson, www.surveyspain.com says:

    Instead of offering discounted mortgages, SAREB may just offer at lower prices, in the same way as all private sellers have to do. Will continue the spiral of lower prices.

  • Hi Campbell,
    It doesn’t really matter how low the prices are, if there’s no mortgage facilities, the properties will not find a buyer.
    There probably was once, a large number of people with a couple of hundred thousand in €50 motes, stuffing their pillows, but there’s not so many now.
    That apart, the banks etc are subjected to even more legislation about the handing over of colossal amounts of money.
    Anyone smart enough, or unscrupulous enough to be able to stuff their pillow (and their mattresses) with ill-gotten money, are more than smart enough to be “discreet” in how they dispose of it – and buying a lousily-built property on a mainly foreign-owned Golf Resort, is not likely to be at the top of their Xmas shopping list.
    Back to the drawing board.

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