Foreign investments acquire 100 million euro portfolio from Spanish bad bank

H.I.G. Capital Announces the Acquisition of the First Property Portfolio Sale by Sareb
• The transaction values the portfolio at €100m.
• The portfolio comprises close to one thousand homes, primarily located in the community of Valencia, Andalusia, Murcia, the Canary Islands and Madrid.
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Brussels gives go ahead to Spanish banks restructuring

The European Commission has approved the Spanish government’s plans to restructure four troubled banks.

Bankia, Banco de Valencia, NCG and Catalunya Banc were nationalised after experiencing heavy losses on loans to homebuyers and property developers. More..

Spanish banks suspend evictions

The Association of Spanish Banks (AEB) has this week issued a temporary freeze on all evictions of “vulnerable homeowners,” following protests after a woman killed herself on Friday moments before she was going to be evicted. It was the second suicide of a struggling mortgage holder in the last three weeks. More..

Expat takes on Danske bank over supposedly fraudulent scheme

Tempted by the offer of a salary for life and an inheritance tax reduction for his two daughters, Euan Armstrong, 73, signed up to an equity release plan in 2004 with Denmark’s biggest bank using his €2 million home in Spain as collateral.

Six years on, Mr Armstrong is forced to live with one of his daughters as he prepares to take on the bank that promised so much yet threatens to leave him penniless.

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Land has gone from being the safest of bets to the riskiest

HOW bad Europe’s debt crisis gets depends largely on Spain, which would be much harder to rescue than smaller economies like Greece. How bad things get in Spain depends largely on the banks, which are already trying to find an additional €15 billion ($21.1 billion) to meet new capital requirements imposed by the government. And how bad things get for Spanish banks depends largely on the country’s unfolding property bust. Nestling at the heart of these worries is land.
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Recovery in the sale of new build property

According to Pedro Pérez, the general secretary of the G-14 (association of Spanish developers) the sale of newly built property has started a mild recovery, and this position will be consolidated in the coming months. Backing this up, the latest INE (Spain statistics institute) statistics showed an increase of 7.6% in inter-monthly sales, with over 20,000 sales in September.
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Spanish bank provisions to double

It has recently been announced that the Bank of Spain will be introducing new rules in the next few weeks to double the amount written off by Spanish banks and Cajas (saving banks) when the banks hold repossessed properties for longer than a year.
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Spanish banks becoming estate agents

According to a recent article in the Spanish Daily paper ‘El Pais’, default rates have risen to 3.29%, a level not previously seen since 1997. As I had previously predicted banks are getting back into the property game and are setting up real estate agencies to sell repossessed stock.

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Spanish bank guarantee petition

Quite a while back I wrote an article on Spanish bank guarantees, how they work, etc… Unfortunately how so something theoretically is supposed to work does not always work in practice as I found out not too long ago when I came into contact with Ruth Genda.

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Spanish banks to the rescue?

According to the Herald Tribune, Grupo Santander will be acquiring the remaining stake in Sovereign Bancorp that is does not currently own.

Santander said it would pay $3.81 a share for the 75.65 percent stake in the U.S. bank it does not already hold. This is a total figure of 1.9 billion dollars.

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Zapatero announces 30-billion-euro fund for Spanish banks

In an interesting move this week, the Spanish government has adopted its first measures to help alleviate the effects of the current worldwide financial crisis. Prime Minister José Luis Rodríguez Zapatero has announced the creation of a 30 billion euros fund to ensure that the availability of credit continues and that deposit insurance will be raised to the sum of 100.000 euros.

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Spanish banking

An interesting article appeared today in The Independent today which appears to validate a recent article I wrote about the credit crisis and its effects on property on the Costa del Sol.

This is of course the story of Santander taking over Bradford & Bingley. This is after having already acquired Abbey National and Alliance & Leicester.

Santander’s strength rests on what it calls its five pillar system.
These are:
Customer-focused management
Efficiency
Credit risk quality
Capital discipline
“Multi-local” management with a global vision

Using these strategies managed to turn around the failing Banesto (Spain) in only five years. This was followed by Banco Central Hispano (Latin America) and within a decade had become the largest bank in South America. And now, as we can see European banks are next on the list.

To get an idea of the size of the group, Santander currently consists of 131.819 employees, over 65 million customers, 11,178 branches and 2.27 million shareholders.
Its strength is in the fact the most of its revenue is generated in retail banking (82%). Retail banking refers to doing transactions directly with consumers, rather than large companies or other banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. Unlike many US & UK banks which have been relying more and more on doing transaction with other banks to generate their profits. SIV’s being a good example.

This combined with regulation put in place by the Bank of Spain (again see previous article property for sale Costa del Sol) potentially means that it is therefore largely immune from market swings.

This is backed up by the article which states the group has made a 9 billion euro profit this year, that’s a 19.3% increase on the previous year. Normally impressive, in the current climate that is extraordinary!

Of course this might not be good news for everyone. Although Santander works on the premise of having many branches, as can be seen throughout the Costa del Sol, this is a lean company that has no compunction in shedding what it sees as wasteful. This will benefit its customers but might cost jobs.

What does the future hold for Santander? Simple really, like any good investor you have to keep your eye out for bargains.

Regards
Andrew Bellés

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Credit crisis and the effect on property for sale on the Costa del Sol

Well let’s be honest the current economic crisis has affected everyone to some degree. Higher prices of basic necessities (bread, milk, etc…), increases in interest rates or simply paying more at the petrol pump.
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