Since last March 23rdthe European Union obliges the Spanish State to count the debt of the Spanish bad bank Sareb in the Spanish public debt1. That means that 35 billion euros will be added to the accounting of the public debt of Spain, so it raise from 117% to 120% of GDP. Sareb was created with the objective of buying all toxic and problematic assets that the banks had in order to “clean” their balance sheets. The Minister of Economy during this time, Luis De Guindos, had the intention that this company despite having the majority of public capital would not appear in the accounting as public. That attempt to deceive Europe has finally failed now, in the midst of a pandemic and with one of the most indebted moments in our history.
The creation of a real estate asset management company, or bad bank, was one of the conditions imposed in the MoU2,the memorandum of understanding signed with the European Union for the financial rescue of Spain in 2012. It would take care of housing and land that was held by entities where the signed loans had not been paid as well as bad loans with enormous difficulties in recovery. Thanks to Sareb, entities would no longer have the burden of having to provision those assets that only generated expenses and forced them to reserve capital.
For a company to be considered public half of its capital has to be public. The way in which De Guindos tried to pass Sareb off as private was to convince the banks to put up 55% of the initial capital3, aking into account that this initial capital would be used to get rid of their own real estate debts. In this way, they could convince Europe that Sareb was a private bank and therefore its debts would not need to be accounted for in public debt. These 4.8 billion initial capital were not enough and that is why Sareb issued 50.781 billion euro in bonds4, 20 times more than what the private banks had put in. However for that loan the banks do not count as guarantors and the only liability in the event of bankruptcy lies with the state.
If Sareb goes bankrupt the state would have to execute 35 billion euros which is a quarter of what it owns for European funds for the Coronavirus crisis. Logically the bank should take care of 55% of this debt since that part of the initial capital corresponds to it but the state is not going to pressure them to pay the bill and the law agrees with them since the government of PP decided that the state was the only guarantor of the loan. Logic would also dictate that since we must take over the Sareb debt its immobility stock should also belong to the population and serve to alleviate the current housing crisis. For all of this it is necessary that the people will be aware and fight for justice.
1 https://www.elmundo.es/economia/macroeconomia/2021/03/23/605a181121efa09f1a8b45fc.html 2 https://www.sareb.es/en_US/about-us/corporate-governance/normative 3 https://elpais.com/economia/2012/12/18/actualidad/1355817555_751503.html 4 https://www.sareb.es/es_ES/conoce-sareb/quienes-somos/sareb-en-cifras