MADRID: Spain’s “bad bank”, key to cleaning up the bad-loan ridden financial system, said Tuesday it had met its first money-raising target by luring investors including Deutsche Bank of Germany, British bank Barclays and French insurer Axa.
The bank, SAREB, will absorb tens of billions of euros in bad assets that have been weighing on the balance sheets of Spain’s banks since the property market crashed in 2008. It will then seek to sell those discounted assets at a profit.
Spain’s eurozone partners insisted on the creation of a bad bank after they agreed in June to provide up to ¤100bn to rescue the crippled banking system of the region’s fourth-biggest economy.
SAREB said it had fully met its initial target for raising capital, bringing in ¤524m ($690m) from private investors, which also included eight Spanish banks and three Spanish insurers.
Spain’s state-backed Fund for Orderly Bank Restructuring, or FROB, will add in another 431 million euros, SAREB said in a statement.
SAREB will now sell subordinated debt to its private stakeholders and other investors, aiming to boost its reserves to up to 3.8 billion euros of which 25 percent will be capital and 75 percent debt. The bad bank eventually will manage about 55 billion euros in bad assets.
SAREB said it would start by acquiring about 40 billion euros in assets from state-rescued banks Bankia, Catalunya Bank, Caixa, Novagalicia and Banco de Valencia before the end of this year.
“With the closing of 100 percent of the capital of the first phase, SAREB will be in good condition to undertake the goals that it has been set,” the bank said in a statement.
AFP
