A "bad bank" in Spain tries to do what successful real estate funds in the world had done as it trades loans for the property as it tries to cut losses from "toxic assets." Reuters reported that the losses were casualties it incurred due to a financial crisis that arose in the country.
Sareb got more than $57 billion in real estate and assets that have turned bad from nine Spanish savings banks in 2012. This was a step towards trying to rescue these banks while the government tried to "draw a line" to stop the banking crisis.
These remaining banks were part of the 12 that had survived out of 55 banks during the 2008 financial crisis.
The surviving banks have tried to minimize operations to save money by removing non-performing assets, reducing them to about 60% of what they were in 2013. However, Sareb remained in a struggle of sorts.
Spanish real estate prices are to be blamed for the slump. Prices have depressed the value of loans, leading to massive foreclosures. Sareb tried to buy these to salvage them at a discount; the amount was 46% and 63%, respectively, of the original prices.
Spanish occupational pension funds also belong to the spectrum covered by the property-turned-funds. From 12 months up to March 31, these managed to bounce back to 2.18%, where they managed to recover losses that happened during the latter part of 2018, according to IPE. The reports were gleaned from the Investment and Pension Fund Association (Inverco) analysis.
First-quarter figures for the Spanish occupational funds were at 2.7%. That's for the three years to end-March 2019 and 3% for a five-year period. Xavier Bellavista pointed out that most "fixed income assets" have enjoyed a return of excellent proportions in the first four months of 2019. Yields have relaxed due to further interest rate hikes, which allowed fixed assets to grow on the strength of additional capital appreciation.
The troubles of the banks in Spain, meanwhile, is somewhat different from the other "bad banks" which are found in Europe. Britain and Ireland were among the European nations which suffered during the financial crisis, but their property markets have since managed to rebound, in contrast to the problems currently besieging the country.
Sareb is looking for other avenues with which to improve the Spanish "bad bank" situation. Sareb is looking at working with fund managers and boosting the Spanish real estate market, which is expected to slow down some more in 2020.
