[Anonymous]

Not wanting to clutter the thread on the Euro (Greek) demise. How about this for thought.

http://www.spanishpropertyinsight.com/market/housing-starts-spain-v-uk.htm

Taking housing starts from the year 2000 until 2007 from the above data (2007 assumed to be the same as 2006) we have approximately 6 million properties built.

I think an average loss of 100,000 Euros on each property is a very realistic figure. (in fact an underestimate)

That is a loss of 600 BILLION Euros on the Spanish property market, held by banks and private individuals.

Not included in the calculation is the property starts of 2008, 2009 and 2010!!

Why do we hear so little of Spanish problems?

[Anonymous]

interesting extrapolation. The people taking these losses are not on the street’s yet. Do you think many Bankers will get a sympathy if they come out on the streets.

Whilst at present the attention is on Greece. I feel the attention will divert to Spain later in the year or early next year & after the Spanish election.

[GarySFBCN]

While the loss estimate may be correct, it is only realized if all 6 million of those properties are for sale now.

And as you stated, the losses are spread around banks, people, etc.

Fiscal oversight entities seem to be concerned only with the fiscal health of banks and countries. If most of the losses are the burden of people, it doesn’t seem to matter.

[logan]

Banks and individuals are holding on or attempting to sell at an unrealistic price. The loss is only taken if either a foreclosure takes place or a sale at the loss level.
Many Brits for example who have lost carry the debt on their property in the UK through second mortgages taken out to buy in Spain. So essentially that loss is hidden.
Some are also renting successfully long term to other people, mainly Spanish made homeless by foreclosure.
Shakeel is right the reason why you hear so little right now about the problems in Spain is attention is focused elsewhere. Also Spain has not come clean yet with the true extent of their losses, especially the banks.
If Greece does go down and I believe it eventually will then contagion will spread to Spain, pushing up bond yields and forcing the government to reveal the amount of financial help it actually will require to stay afloat.

[Anonymous]

A loss is not a loss until it crystalises. For prudance & accounting standards the value of the these assets which the Bank are carrying should be qualified by the Auditors in some form or another.
Where these properties or land appreciates a revaultion account is used to reflect the current state.

If this account exist on the Banks balance sheet this should be adjusted to refect a current & fair value. I doubt very much if this is being done.

[logan]

Spanish banks had previously moved their ‘none performing assets’ off balance sheets. Only recently the government forced them to come clean to force through mergers and buy outs of the caja’s.
The last intelligence I read was the government was quietly funding these insolvent banks that nobody wants to either buy or merge into.

[Anonymous]

it seams that they are doing the same as British government has done with “Northern Rock” i.e. good bank & bad Bank.

[logan]

@shakeel wrote:

it seams that they are doing the same as British government has done with “Northern Rock” i.e. good bank & bad Bank.

Similar but not the same. The UK were up front and honest with the true state of their banks losses.
These Spanish banks were supported for years by the ECB until relatively recently when Trichet finally said enough. Then the Spanish government had no choice but continue the rescue funding and try and find private investment. So far no financial institution I know of wants to know and who can blame them.

[Author]

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