Spain’s ‘Bad Bank’ Struggling To Find Buyers

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Sareb, the ‘bad bank’ set up to take the toxic assets off the books of other banks, is struggling to offload the property to new buyers.

High property prices are being blamed for 'deterring investors' and not attracting the level of interest that had been aimed for.

The assets are mainly distressed property that is the result of repossessions by lenders and the sheer volume involved continues to place a heavy weight on the Spanish property market and the overall economy.

Sareb has an estimated €51 billion worth of assets which include loans as well as property, but the valuation of much of the property is a contentious issue.

Several major property investors have expressed the view that prices need to be more realistic in order to start shifting the assets in significant volumes. However, the bank is showing little sign of a change in policy.

Reuters has reported that the bank is demanding prices close to those for prime assets in markets such as Paris and London and that it is unlikely to reach the target of selling €1.5 billion worth of assets this year.

The Spanish government and the International Monetary Fund are still backing Sareb as part of the deal reached to bail out the ailing Spanish economy and believe that only by sticking to its mandate will the ‘bad bank’ be able to achieve its aims.

Experts at Goldman Sachs have stated publicly that they believe prices need to fall by a further 10% in order to kick start the market. Economists at the company, Andrew Benito and Sebastian Graves, have stated that banks are also risking the recovery by continuing to offer loans to "unhealthy sectors".

Anyone thinking of investing in Spain and taking advantage of the current situation should consider the range of options when it comes to transferring money abroad. For instance, foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

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