José Barta, 24 de mayo 2012
The measures taken by the Spanish Government, last May 11th, finally began to lay new basis for the clarification and quantification of the real estate risk of Spanish financial institutions.
Regardless of the results which, in my opinion, will produce the strategy adopted by the Government Rajoy – that I will publish in few words once I finished the meetings of work with my current clients, designed to facilitate the adoption or correction of their strategies – in few lines I want to outline a subject, not small, that should be resolve by the executive On the concept of real estate companies participated by Spanish financial institutions, I include all those companies operating in the real estate sector, even if they are soils or buildings instrumental holders, or even if they are real estate developers, whose activities are, in any case, linked to the real estate sector and who is holder of such assets, including those who have merely “rights” on assets or real estate projects.
The large and cumbersome of the previous paragraph is justified by the need to cover a reality characterized by the “euphemisms”, or even by the “occult”, of some financial institutions.
The feature of these companies is diverse. Financial institutions are present in the capital of large real estate (Metrovacesa, Colonial, Afirma…), although the vast majorities have stakes in small developers non-quoted on the stock exchange. These subsidiaries, to 100 per cent, or in which they have a control stock package or minority, touch all real estate business.
In 2008, when some managers were still dismissing the current crisis, it became possible to quantify the presence of “main banks and savings banks”, in 465 promoters.
More than 300 of these 465 companies were in the red by the paralysis of their activity.
Currently we must consider that the deterioration of the real estate assets of these companies, joins an exploitation in lost.
This type of real estate has increased in the past three years as a result of a practice that has been spreading in the financial sector: the acquisition of shares against debt turning this into shares of the companies in great risk of default.
Knowing that BFA-BANKIA has stakes in more than 200 of these companies can give us an idea of the importance of the dimension of the risk posed by this practice. The majority of these holdings are valued, into group actives, at its value in their Balances, in which potential losses arising from the fall of the market are not collected.
Not less than 1,000 related to real estate companies are currently invested by financial institutions in Spain.
We are talking about difficult-to-do estimations, given the lack of transparency, but that easily overcome two tens of billions€.
It is urgent to undertake this ultimate challenge of transparency, irrespective of the solution to apply subsequently.