MADRID (Reuters) - Spain’s bad bank will start with equity of 5 billion euros ($6.35 billion) and international investors are likely to focus on buying assets instead of becoming shareholders, a bank aid fund director said.
The start up amount includes 1 billion euros in capital and 4 billion euros in subordinated debt, Antonio Carrascosa, managing director of the bank restructuring fund (FROB), said.
“The interest from international investors is more focused on the second stage of the process when the assets transferred to the bad bank can be sold, whereas national banks are seen more likely becoming shareholders,” Carrascosa said during a presentation of Spain’s bank restructuring process.
The bad bank is a condition for Spain to receive up to 100 billion euros in European aid for crippled lenders. Economy Minister Luis de Guindos said on Monday he expected to apply for between 35 billion and 40 billion euros of that aid.
The bad bank, due to be up and running by the end of November, will have a maximum asset volume of 90 billion euros.
It will initially receive assets from four state-rescued banks, including Bankia (BKIA.MC), worth 45 billion euros but is expected to manage assets worth 60 billion euros over time.
“If foreign investors make up 10 percent of the equity tranche that would be great news, and if we don’t achieve that we would need more domestic investors,” Carrascosa said.
Spain’s government wants to keep its stake in the bad bank below 50 percent to reduce the burden on state finances and a direct impact on public debt and expects private investors to own at least 55 percent.
The Spanish government is applying steep discounts to property assets transferred into the bad bank and has pledged significant returns in a move to lure reluctant investors [ID:nL5E8LTHYG].
Since peaking in 2007, housing prices have fallen around 30 percent on average but analysts consider the bottom of the market may still be two years off, with prices potentially falling a further 20-30 percent.
($1 = 0.7868 euros)
Reporting by Jesus Aguado, Editing by Paul Day and Helen Massy-Beresford