The most recent announcement from the Society for the Management of Assets from Bank Restructuring (SAREB) is that it will not be able to return part of the debt Debt Multilateral debt Which is due to the World Bank, the IMF, regional development banks such as the African Development Bank and other multilateral organizations such as the European Development Fund.
private debt Loans contracted by private borrowers regardless of the lender.
Public debt Set of loans contracted by public borrowers. Rescaling. Modification of the terms of a debt, for example modifying the maturities or in relation to the payment of the principal and/or interest.
that it has with the guarantee of the State, which amounted to 50,781 million euros at its origin in 2012 and was 29,413 million euros at the end of 2023 (1). Specifically, in its recent presentation of results, the bad bank has acknowledged that it will be impossible for it to repay 14.6 billion euros, which will further increase the public debt when the company's mandate expires in 2027. The holders of these bonds are the main banks, such as Santander, CaixaBank and BBVA (2).

Source: SAREB

'There is a part of the debt that will not be able to be amortized,' admitted Leopoldo Puig, CEO of SAREB, in the presentation of results on April 25. 'In our official accounts we already reflect a negative equity of 14.6 billion, that is already giving an indication of where things are going…', he said. And he doubted whether they would be able to liquidate the entire portfolio in 2027 (3).

In the leaks of banking in general and the bad bank in particular, it rains in the wet. In the rescue of up to 100,000 million euros that Luis de Guindos, under the popular government of Mariano Rajoy, signed in 2012 (4) and that the public debt and deficit already skyrocketed that year (5)we must account for the reclassification in the Public Administration sector of 34,182 million euros from the SAREB in 2020, in the middle of the pandemic, by mandate of the European Commission, strict supervisor of the entire restructuring process of Spanish banking since its beginning (6). The result was an increase in public debt that represented no more and no less than 3% of the GDP Gross domestic product
GDP
GDP is an index of the total wealth produced in a given territory, estimated based on the sum of added values.
Spanish at market prices in December 2020, according to calculations by the Bank of Spain (7)which contributed to exceeding 125% of GDP in the first quarter of 2021 (8). (See AIReF graphic)

Source: Independent Authority for Fiscal Responsibility (AIReF)

SAREB, between vultures and parasites

From these lines we have given a good account of the practices of the bad bank that, managed between vultures and parasites (9) have led it to record loss after loss, with transparency that could be greatly improved. An endless black hole for which no one is responsible.

These practices include the former directors of the bad bank who end up joining the banks and funds benefited by the SAREB. As in the case of Álvaro Areal, former deputy director of SAREB for almost a decade, who was signed in early 2023 by Blackstone, a vulture of houses and casinos. (10). A few months earlier, Areal had been one of the top managers of the SMO (Simplification of the Operating Model) project, which culminated in the awarding of the spoils of the bad bank to the vultures of KKR and Blackstone, Hipoges and Anticipa-Aliseda, respectively. The SMO Project was implemented after SAREB became majority public, starting in 2022, with 50.14% of the bad bank in the hands of the FROB, “Executive Resolution Authority”.

Unashamedly acknowledging that it has not and will not fulfill the mandate entrusted to the bad bank, its managers have not been shy about pocketing scandalous salaries. In 2019 alone, directors and senior managers raised more than five million euros (eleven).

And the SAREB website itself specifies that “it is subject to rigorous supervision carried out by three organizations: The Monitoring Commission, the Bank of Spain and the National Securities Market Commission (CNMV).” The Monitoring Commission is made up of the Ministry of Economy, the Ministry of Finance, the Bank of Spain and the CNMV. Likewise, “it may require additional supervision by other national or supranational public entities, as is the case with the central bank Central bank Entity that, in a State, is generally responsible for issuing banknotes and controlling the volume of currency and credit. In Spain, it is the Bank of Spain that assumes this role, under the control of the European Central Bank (ECB, see below).

The Central Bank of a country manages monetary policy and has a monopoly on the issuance of the national currency. It provides currency to commercial banks at a price determined by the policy rates, which are set by the bank itself. European (ECB ECB
European central bank
The European Central Bank is an institution based in Frankfurt, created in 1998. The countries of the euro zone* transferred their powers in monetary matters to it and its official function is to ensure price stability (fight against inflation) in said zone. . Its three decision-making bodies (The Governing Council, the Executive Committee and the General Council) are made up of the governors of the central banks* of the member countries and/or “recognized” specialists. Its statutes make it “independent” politically but it is directly influenced by the financial world.
), who attends their meetings as an observer.”

“Banks and shareholders will have to suffer losses before state aid measures are approved (…)”
Memorandum of Understanding between the European Commission and Spain

But in addition, the financial rescue document itself, the Memorandum of Understanding between the European Commission and Spain, which includes the obligation to create the impaired asset management entity for their segregation, details the following:

“Banks receiving state aid will contribute from their own resources, to the greatest extent possible, to the cost of restructuring. Possible measures are the sale of stakes and secondary assets, the elimination of secondary activities, the prohibition of dividend payments, the prohibition of discretionary remuneration of hybrid capital instruments and the prohibition of non-organic growth. “Banks and their shareholders must suffer losses before state aid measures are approved, and ensure that losses from equity instruments and hybrid equity instruments are absorbed to the greatest extent possible.” (12).

New EU tax rules

This recognition that the bad bank will not be able to repay the bailout, which will further swell the public debt, comes as the European Union (EU) officially returns to austerity. On April 30, the new EU tax rules came into force (13).

Among the rules is that countries with excessive debt will have to reduce it, on average, by one percentage point per year if it is above 90% of GDP, and by 0.5 points if it is between 60% and 90% of GDP. GDP. If the deficit exceeds 3% of GDP, the country in question will have to reduce it in periods with growth to reach 1.5% and accumulate spending capacity to use it when economic conditions are less favorable. Member states must submit their first national plans before September 20, 2024 (14).

This recognition that the bad bank will not be able to repay the bailout, which will further increase public debt, comes as the European Union (EU) officially returns to austerity.

Meanwhile, evictions continue, as do housing imbalances. In one of its latest statements, the Platform for People Affected by Mortgage (PAH) includes the number of evictions carried out in Spain in 2023: 26,659, according to data from the General Council of the Judiciary (CGPJ). These evictions are broken down as follows: 5,260 derived from foreclosure, 19,676 as a result of non-payment of rent, and 1,723 derived from other causes. “Banks have also filed 19,577 new mortgage foreclosures, which will undoubtedly increase the number of evictions for this reason in 2024,” adds the PAH.

According to the platform, “these figures corroborate, first of all, that the Human Right to Housing is non-existent, due to the lack of Public Park, so many times claimed by the PAH. Also, as we have been denouncing, although the social shield prevents many evictions, it is insufficient to face the speculation Speculation Activity consisting of seeking profits in the form of capital gains by betting on the future value of financial or monetary goods and assets. Speculation generates a divorce between the financial sphere and the productive sphere. The exchange markets are the main place for speculation. ”. Among the final demands of that statement, the PAH demands that the Government “immediately place the entire Sareb park in the Public Housing Parks, and demand the temporary use of the park in the hands of the rescued bank as part of the payment of its debt, and to invest in the expropriation of part of the 3.8 million existing unoccupied houses” (fifteen).

Both financial institutions and funds, when their clients or tenants do not pay, evict them without hesitation and bring the full weight of the law down on them. Why for them is their unrepaid mortgage, which amounts to billions of euros and affects the interest Interest Amount paid as remuneration for an investment or received by a lender. Interest is calculated based on the amount of capital invested or lent, the duration of the operation and the last rate applied at that time. general (16)their unpaid debts, their disastrous management, their flagrant plundering of the public coffers have no consequences?

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