What is happening?
In December the Spanish bad bank SAREB was formed and started to take over property from the Banks in trouble. At this point we at IMS had a mortgage client who was buying a property In La Manga direct from one of the banks.There were in fact a few apartments all of which had been sold and completion was supposed to be in December for all of them.
A few days before completion the Lawyer who was dealing with all the sales called to say the sales had been suspended because the apartments had to pass to SAREB. This seemed at the time rather ludicrous because these apartments were in fact technically sold and due in the next few days to go to completion to new private owners.
Even more bizarre the Lawyer at first had to tell all the clients that in fact they would no longer be able to buy the apartments at all as they could not buy them direct from SAREB. This was later changed to they can continue to be sold but completion must be January and the purchase must be made from SAREB not the Bank. The assets had to therefore transfer to SAREB first before they could then be sold to the very people who would have happily bought them back in December direct from the Bank.
The impact of this was also that the IVA which until end of December was 4% would increase by purchase date to 10%.As this was not all confusing enough and lacked any logic we are now at the end of January and no completion has taken place.
Feedback from the lawyer is that SAREB consists of one office with three to four personnel so quote unquote “not to expect any feedback on completion dates or otherwise for at least a few months”. This feedback on SAREB and the confusion surrounding was first brought to my attention earlier in the week by a senior exec within Spanish Banking. Whilst there was a touch of the kettle calling the pot black he was astounded at the lack of clarity on the launch of the bad Banks and said it was impossible for even the banks to communicate with them.
So we have at least one situation where 6 problem apartments could have in fact been sold in December without going to SAREB and sold at a price that will almost certainly be more than SAREB would finally obtain if the buyers that are currently in place are lost between now and when finally the process is sorted.
It beggars belief that a government appointed bank has been set up in such way, no process in place, limited personnel and no clear timescales or service standards. Given many countries already have bad banks could Spain not have just replicated what already exists out there and put in place from word go workable format that could hit the ground running.
This looks like a rush job put in place to satisfy European partners requirements but could end up a complete PR disaster unless someone gets a grip soon.
Not sure how the private investors who invested in the Bad Bank or the Spanish Banks that were gang pressed into contributing are going to feel about the complete farce we have in place at present.
Recovery in Spain in 2014. I should coco !