Bank of Spain makes Sareb blush

The cost of the Sareb’s assets acquired from the Spanish troubled banks remains unknown, but 24 companies participated in the valuation of the new entity’s credit and assets porfolio.

Now that the Bank of Spain wants the Sareb to repeat the assessment, the central bank also forced it to provision the losses in the case that those assets fair value was lower than the registered accounts. Anyway, this boxing the Sareb in the ears is not expected to involve any kind of punishment despite the operation can be considered a poor management by the Sareb’s managing team. The state owns a 45% stake of the so-called bad bank.

The Bank of Spain’s warning coincided with the Sareb’s sending of its annual report on corporate governance to the Spanish markets authority CNMV. As reported by the Sareb, the company’s average remuneration in 2013 was fivefold Spain’s average salary, also over any firm within the Ibex, and twice the average wage of the two biggest Spanish banks’ employees. The company’s structure is noticeable too: of an average staff of 126 workers, 31belonged to the managing team, 62 were heads of departments and officials, while 33 had administrative and commercial positions. Many consider this staff as excesive since the Sareb’s developing is mainly based on the outsourcing of almost all their competences.

Another controversial point is the Sareb’s Board of Administration, having 15 members, the maximun that the Corporate Governance Code recommends, which shared out €1.5 million – about €100,000 each yearly-. The question is that many of them do not have any experience on real estate affairs.

Independently they had to value again their toxic assets portfolios, the Sareb continues applying its services outsourcing policies. In fact, the bid to assign its credit and properties has already started. With this aim the company divided its €50 bn on toxic assets in ten different portfolios.

About the Author

Carlos Díaz Guell
Editor at and, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.

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