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Categorized | Banks, Property

Spain’s ‘bad bank’ Sareb doubles losses

Posted on March 31, 2015

Sareb, Spain’s so-called bad bank, doubled its losses in 2014 even as the country’s broader real estate sector continues to recover.

The asset management company reported losses of €585m over 2014, compared with €261m a year ago, on the back of €719m in provisions on some of its assets after consultation with the Bank of Spain.

    Sareb, created in late 2012 following Spain’s real estate collapse and financial crisis, was designed to absorb and eventually resell soured property assets.

    Just over €50bn of assets were transferred from the country’s bailed out banks in two tranches in late 2012 and early 2013. Of particular importance were assets from Bankia, which embodied Spain’s crisis following its ill-fated 2011 flotation. The bank has since returned to profitability and in February said it would pay a dividend.

    Sareb, which has 15 years to sell off its assets, has whittled its portfolio down to just over €44bn as of the end of 2014.

    Although the company made a loss last year, it said it stands to benefit from Spain’s broader recovery. The government forecasts that the country’s gross domestic product will grow 2.4 per cent in 2015, while at the end of last year Spanish house prices rose at the fastest rate in six years.

    “Sareb is now in a position of greater strength and less uncertainty in facing the coming years of activity and in benefiting as much as possible from the emerging market recovery,” said Jaime Echegoyen, the asset manager’s chairman who took on the post after Belén Romana’s resignation in January.

    “Demand is a lot more solid than before,” he added at a Madrid press conference on Tuesday.

    Without taking into account the effect of provisions, Sareb made a loss of only €45m — a significant reduction on 2013. It said activity picked up, although added that almost half of its sales came from just four provinces — Madrid, Barcelona, Valencia and Málaga.

    Late last year, the bank hired four servicing companies to assist it in selling assets — Haya Real Estate, Altamira, Servihabitat and Solvia. Sareb said these companies would help make its operations more efficient and profitable.

    The asset management company’s gross income was flat compared with 2013, at €1.6bn. Mr Echegoyen did not say when Sareb would become profitable.