Sareb is a company that forms part of the plan set out by the Spanish State and the European institutions to recapitalise the financial entities most affected by the financial crisis of 2008. We are not a bank, we are an company that absorbed the impaired assets of such entities.
How did we purchase the loans and properties in 2012 and 2013?
It was a complicated situation, we had to act fast so that those struggling financial entities could restructure their balances and gain liquidity at the same time. That is where our work began. In 2012 and 2013, we purchased a package of around 200,000 troubled assets, which included developer loans and properties, for a reduced price established by the Bank of Spain of €50,781 million. We paid them with bonds guaranteed by the Public Treasury, which the banks could exchange for cash in the Central European Bank.
- Our commitment is to reduce costs for taxpayers by paying back the maximum amount of the Government-backed debt.
- Our work is managing and selling the assets in our portfolio.
- We sell, build and transform our assets always seeking to maximise their value.
- The income from sales enables us to fulfil our mandate of liquidating the assets and cancelling the debt.
In terms of the composition of our capital, 54.1% is private (from banks and insurance companies) and the other 45.9% is public (from the FROB), the Fund for Orderly Bank Restructuring).
What is Sareb and how does it work?
2007 to 2012: crisis and problems for the financial sector
Until 2007, the Spanish financial sector was greatly exposed to construction and real estate development. Approximately 60% of all loans granted by banks and savings banks were for this sector, an extremely high concentration, which posed a risk for the financial system.
Since the end of 2007, the effects of the international financial crisis extended to the entire economy and, in Spain, it particularly affected the construction and real estate sector. Then the volume of dubious loans, those with high default rates, started to increase.
The drop in the price of houses made the situation worse, since it involved the loss of value of a large part of the loan guarantees (properties mortgaged by the developers). The square metre reached its highest value in 2008 (€2,096) after a sustained growth which began in 2004 (€1,400). From 2008 to 2012, the price of properties had dropped by 21.5%.
2012: origin of Sareb, a public assignment agreed in the Memorandum of Understanding
In 2012, given the scope of the problem and now in the context of a serious financial crisis, the State carried out a joint action with the European authorities within the European recapitalisation programme, which was formalised in the Memorandum of Understanding. It was signed on 23 July 2012 and included for plans of action:
- Study each bank’s need for capital by analysing the quality of their assets and a resistance or stress test.
- Recapitalise and restructure the weakest banks based on their capacity to resolve the capital crisis identified in the stress test.
- Identify and classify the impaired assets (bad debt and overvalued properties) of the banks that were going to need public help for their recapitalisation.
- Transfer those troubled assets to an external management entity: Sareb.
The Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria (Management Company for Assets Arising from the Banking Sector Reorganisation) (Sareb) was founded in November 2012. On 31 December, we incorporated into our portfolio the assets from the five entities that had already been intervened by the FROB: BFA-Bankia, Catalunya Banc, Banco de Valencia, Novagalicia Banco and Banco Gallego. And in February 2013, we completed the portfolio with the assets from BMN, Liberbank, Caja3 and CEISS.
In total we acquired 198,211 assets valued at €50,781 million:
- 90,765 were developer loans, for a value of €39,438 million, guaranteed or endorsed by around 400,000 properties.
- 107,446 were properties, for a value of €11,343 million. Approximately half were houses and ancillary units (storerooms and garages), the other half were plots, retail units, commercial buildings, industrial warehouses, etc. These included completed properties and others still in the construction phase.
From 2012: 8 years of meticulous work with our portfolio of assetshe Spanish economy
The aim of our business model is to generate sufficient income to amortise the debt that we issued at the start of our activity and address the interest associated with it.
The income is obtained from the sale and management of the package of assets we purchased between the end of 2012 and the beginning of 2013. We have a limited time frame to achieve it.
In our day to day activities, we manage and sell loans: we recover and cancel them when possible, or we transform them into properties by means of enforcement procedures and dation in payment. With this transformative strategy, our portfolio becomes more flexible and liquid, since the properties are easier to sell than the loans.
In our day-to-day activities we manage and sell properties. Furthermore, we complete unfinished developments, we build new ones and we sign collaboration agreements with administrations for the assignment and sale of social housing.
Who we are at Sareb
We are a team made up of 394 people, with various professional profiles. Sareb’s employees provide the company with an average of 19 years’ experience in various sectors, mainly, the real estate and financial sectors.
At Sareb we follow an extended company model in order to manage the vast volume of assets in our portfolio more efficiently without increasing the work force excessively. Accordingly, we have four real estate asset management companies with which we cover all the regions of Spain: Altamira Asset Management, Haya Real Estate, Servihabitat and Solvia.
At Sareb we are extremely aware of the specific nature of our function. We assumed an assignment that was key for the restructuring of the financial system and which has not ended yet. We are committed to the Spanish authorities, to the European authorities and to society as a whole. Therefore, our day-to-day work follows a strict internal code of conduct based on transparency, integrity and civic engagement.
Pursuant to these criteria, Sareb contributes to the achievement of the goals of the United Nations 2030 Agenda.