Spain’s “bad bank” has revealed an ambitious new timetable for the liquidation of its €50bn portfolio, saying it plans to sell almost 42,500 housing units – about half of all properties under its control – in the next five years.
Spanish house prices are still in sharp decline and demand is forecast to remain sluggish in the years ahead – factors that are certain to complicate the search for buyers.
Officials close to the state-run bad bank (Sareb) have long argued, however, that it is important to start selling properties as early as possible, in an attempt to provide a pricing “floor” for other investors and help restart a broader recovery in the housing market.
Luis de Guindos, Spain’s finance minister, told a parliamentary committee earlier this month that Sareb was aiming to sell properties worth €1.5bn this year alone.
The five-year sales target is part of Sareb’s new business plan that was agreed late on Wednesday. The plan also sets out a revised profit forecast, trimming the expected annual return for Sareb investors from 15 per cent to 13-14 per cent. The bad bank is set to operate for 15 years, after which it will be shut down.
Created at the end of last year, Sareb forms a key plank in the government’s campaign to clean up the country’s banking sector after the recent property bust and last year’s EU-funded bailout of several key lenders.
Nationalised banks such as Bankia, Banco de Valencia and Caixacatalunya have already transferred the bulk of their toxic property holdings and bad property loans to Sareb, which currently presides over a portfolio of 200,000 assets worth an estimated €50.45bn. These include 76,000 empty homes, 6,300 rented homes, 14,900 plots of land and 84,300 loans, Mr de Guindos said this month.
According to Sareb’s revised business plan, the asset management company will also tighten its internal rules to prevent conflicts of interest. The move comes in response to criticism that some of Sareb’s largest shareholders are banks such as Banco Santander and La Caixa – which themselves own and manage large property portfolios and which are expected to bid for some of Sareb’s assets as well as management contracts.
Sareb said its new regime to prevent conflicts of interest was tougher than that required under Spanish company law, as it barred affected directors from even receiving any information about a transaction.