Document Type

Case Study


In the wake of the Global Financial Crisis, the Spanish real estate market struggled to recover, which posed significant issues for savings banks that had an outsized exposure to the real estate sector. The Spanish government created Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria (SAREB) in 2012 to buy impaired real estate assets from troubled banks and sell them over a 15-year period using funds from an up to €100 billion ($123 billion) loan from the European Financial Stability Facility. Its mandate was “to help clean up the Spanish financial sector and, in particular, the banks that became financially distressed as a result of their excessive exposure to the real estate sector.” SAREB was 55% owned by private interests and expected to turn a profit. Using state-guaranteed debt, SAREB acquired 200,000 assets valued by SAREB at €50.8 billion from troubled banks at a substantial discount to book value. Banks that sold assets to SAREB were either nationalized or supported with government capital injections. To assist in the divestment process, SAREB first hired the banks and later, third-party servicers. Spain’s slow economic recovery hampered asset disposition efforts. As of 2019, SAREB had disposed of €18.1 billion of the €50.8 billion worth of assets it had originally acquired and had failed to achieve the expected returns for private investors.