Spanish banks forced to transfer their toxic assets to the nation’s bad bank are unhappy with the commissions offered to sell the bad property loans. El Pais reported that Bankia, Catalunya Banc, NCG Banco and Banco de Valencia are attempting to negotiate a commission of up to six per cent. This is a considerable hike on the 0.75 per cent and 2.25 per cent level currently offered.
Nonetheless, the bad bank, also known as Sareb, has been willing to negotiate, agreeing to raise the commission to between three and 3.5 per cent. Officials from the bank claim it will increase this further if the four nationalised banks grant vendor financing for acquisition of its own property, according to the newspaper. An additional percentage will also be offered if the bank in question provides funding for the purchase of the property. This means institutions in receipt of €36.968 million (£31.1 million approximately) from the credit facility provided by the EU commission can enter a range between 0.75 per cent and 2.25 per cent, depending on the product sold.
Low or high, the commissions received by the banks must be set at a level that does not hinder the injection of finance in to the property sector. At a time when Spanish real estate is in surplus, toxic asset values are plummeting. The low prices are hoped to attract buyers but further incentive mechanisms must be in place to support to sale of such property, from both a banking and investment perspective.
This will be vital, as data from the Bank of Spain shows that bad loans in the country are rising. Toxic loans reached 11.4 per cent of debts in November, which is a record high for the country. Since June 2011, the total value for bad loans has reached €192 billion (£161 billion approximately). Nonetheless, month-on-month increases have slowed down of late, providing somewhat of a respite for the industry to consolidate its position and shift assets.