Luis the Gundis, Spanish Minister of Economy
Luis de Guindos announced several weeks ago that the bad bank would begin operating on December 1, 2012 with all necessary capital.
The ‘bad bank’, a tool “more powerful even than their capital injections”, according to the Minister of Economy, Luis de Guindos, will benefit from atractive taxation measures to attract investors.
The company, called Sareb, allow banks to dispose property assets on its balance sheet to engage in problematic loans and take deposits give, De Guindos summarized in a press conference after the Council of Ministers approved the royal decree regulating its functioning.
You will also have “attractive tax” as a tax of 1% on the corporation tax, in line with the Collective Investment Funds (sicavs), and to attract international investors are exempt from tax in Spain income derived by non-residents without a permanent establishment. The company will begin operations in December with about 45,000 million euros in property assets of banks in state hands.
For the Deputy Prime Minister, Soraya Saenz de Santamaria, the royal decree gives legal structure of society is “a cornerstone” in the process of clearing the Spanish financial sector.
In our opinion, the new measurements are “a key element” for the economic recovery and to boost the property market and for credit flowing again.
The economy minister said that the creation of the ‘bad bank’ was part of the commitment by the Government to the European Union for support of up to 100,000 million euros to the bank and go live on December 1st.
Right now, he said, is working on the wording of the statutes and the constitution of the company, while the management team selects and presents to investors.
The ‘bad bank’ will take over all the assets and all the assets allocated to credit linked promoter, both problematic as the entities receiving payments, so the government estimates that have a size close to 60,000 million euros .
De Guindos has stressed that the purpose of the company is to facilitate the consolidation of entities, free up capital and allow it to perform professional management of real estate assets, while helping to boost this market.
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Profitability is the key
The company will have a majority of private shareholders and, as planned, it will create several funds with different asset classes to facilitate the entry of institutional investors interested in buying part of the 89,000 homes and 13 million square meters of land.
Participants in these funds will also benefit from a tax regime singular, which frees them from paying the transfer tax and the tax increase in value of land assets that are transferred.
Although the key remains the anticipated return of 15% accumulated in the 15 years of the ‘bad bank’, for which the company will purchase the real estate at significant discounts on book value, which on average are 63 %.
In the case of soil, the reduction amounts to 79.5% and nationalized entities provide about 3,800 million euros in this asset class.
In ongoing promotions, the price at which the assets are transferred to ‘bad bank’ will be 63.2% and finished homes, 54.2%. In loans to developers, another asset that can be transferred to the ‘bad bank’, the average discount is 45.6%, including 32.4% cuts for completed projects and 53.6% for appropriations to finance urban land.
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