Competition hots up to take on €50 million of Spanish ‘bad bank’ property assets

THE competition is hotting up between five firms, all hoping to win lucrative contracts to manage €50 million of Spain’s ‘bad banks’ troubled property assets.

The final five favourites include Solvia – the real estate platform of Spanish lender Sabadell – as well as four US private equity groups: Centerbridge partners, Apollo Global Management, TPG and Cerberus Capital Management, according to industry sources.

Seven groups put in final bids, after an auction which drew plenty more interested parties.

Sareb – the ‘bad bank’ launched last year to clean up the financial sector – will receive money upfront from the winning firms, but will have to pay fees to them for several years.

It is thought that outsourcing the contracts will raise around €1 billion for Sareb, which paid around €200 million in fees last year to nine bailed-out banks.

The banks transferred their troubled assets to the bank, including real estate loans and housing, but have retained the contracts to manage them.

Sareb was set up last year after Spain requested a 41.3 billion bailout from Europe for its struggling banks, having been hit by a dramatic property slump.

After making a loss in its first year, the ‘bad bank’ has another 14 left to turn things around.

The bank took on 200,000 assets, 80% of which were property loans, with the remaining 20% made up of housing developments, shopping centres, commercial buildings and land.

Galicia-based bank Abanca – previously NCG Banco, which was bailed out in the crisis – was among final bidders in the auction, and is reported to still be a possibility to manage some of the assets.