Tuesday, Dec 29, 2009
UK next I hope(Im sick of renting)
WSJ: Spanish Banks Start to Unload Property Portfolios
MADRID—Spanish savings banks have begun selling off the large property portfolios they acquired as collateral from loan defaults, in an effort to improve solvency ratios, a move that risks further falls in property values that could impair the value of their asset books.
I.
As the unemployment rate has soared to more than 19%, residential-property buyers have defaulted on loans in massive numbers, as have property developers, overleveraged in a moribund market. As lenders have assumed the collateral on defaulted loans, local financial institutions—particularly unlisted savings banks—have collected properties valued at about €8.5 billion ($12.2 billion) over the past 12 months.
Posted by waitingtobuy @ 05:10 PM (717 views) Add Comment
3 Comments
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1. hpwatcher said...
when the UK?
The government would never allow that to happen, the whole value of the country is now too linked to [inflated] house prices
2. waitingtobuy said...
HP@1, If any countrys economy is "too linked to [inflated] house prices" it is Spain,but the BoS is still requiring improved solvency.
Solvency pressures on the banks come from several directions. First, the downturn has meant smaller inflows of cash held in deposits and bank accounts. Second, the Bank of Spain recently required local financial institutions to set aside more money to cushion potential losses from a drop in the value of repossessed properties. Banks must now set aside 20%--up from 10%--of the value of a property held on their books for more than one year. Finally, a big restructuring of the savings-bank sector is in the cards, for which banks need funds to clean up their loan books
3. fallingbuzzard said...
I think this will aboslutely happen in the UK. Only RBS (screaming at the time) entered the asset protection scheme and most of the exposure they have is not UK residential. Had all of the banks and building societies entered the APS and put residential mortgages into the scheme, then it would never happen. But they didn't enter exactly because they would want the flexibility to liquidate at a price above 90% of the likely Treasury valuation of assets.