Following on from my Blog about Ireland and Spain and how differently they have approached there property disasters it looks like Banco Santander are about to get real and set the benchmark for dealing with their toxic real estate.
Santander would have received two offers from venture capital firms for buying its real estate assets. It would involve a mixed bag of properties and land whose internal appraisal would be valued at approximately 3 billion euros. The offers received and that are being negotiated would represent a discount off that appraisal in excess of 50%. There are fears in the market regarding the impact that could be caused to property prices by such a large-scale operation.
Bad years ahead, José Barta, a professor of strategies for markets, says in Diario Financiero that “Santander has chosen to put itself in a position of liquidity even though that may generate short-term losses. And that can only be because its estimates for 2012 and 2013 predict anni horribili”.
The fact is that the placement on the market of so many real estate assets by the leading bank in Spain means subjecting the market and other entities to strong pressure in terms of the prices they set for their own real estate assets. In fact, the Expansion newspaper indicates that the Bank of Spain could express its own displeasure regarding the operation due to the strong discounts it would force on the market. Which tells you everything you need to know about the mentality of the Spanish banking system. Surely the best thing now is for Spain to take its Pain and look to start to boom again in 2013 that what its citizens deserve not the banks destroying them.
I for one hope this particular deal goes ahead and in reality there is no way the Bank of Spain can block it. They could buy the real estate and put it in a toxic fund but that’s about it.