BBVA meets Nama as Spain studies 'bad bank' model


SENIOR EXECUTIVES from Spain’s second-biggest bank, BBVA, met National Asset Management Agency officials yesterday as the Spanish authorities announced further details of a “bad bank” to purge toxic loans from its lenders.

Spanish bankers and government officials have been studying the Irish “bad bank” model as Madrid sets up a vehicle to acquire toxic real-estate loans and repossessed properties from the banks.

These meetings are the latest in a recent series of contacts between Ireland and Spain as the Madrid government uses a similar mechanism to remove bad bank assets.

The setting-up of the bad bank follows last week’s results of stress tests of 14 Spanish banks, which found that seven require a further €59.3 billion for potential losses.

The bad bank and stress tests were conditions of a €100 billion euro zone bailout request for the Spanish banks sought last June.

Spain’s economy minister minister Luis de Guindos said yesterday that he wants banks, insurers and other investors to control 55 per cent of the bad bank.

Nationalised banks, including the country’s worst lender, Bankia, will be the first to move assets into the bad bank starting in December, said Mr de Guindos. The bank would acquire assets “at very conservative prices,” he said.

“The transfer price is linked to the real economic value of the assets and will be established through a thorough revision of their quality,” said the minister.

The bank will mostly acquire property developers’ assets but other loans may be taken in if they deteriorate sufficiently, he said.

“Prices must take into account prices today and in 15 years.”

Nama acquired loans with a book value of €74 billion at a discount of 57 per cent over a protracted valuation process.

– (Additional reporting Bloomberg)