Bad loans weigh on Banco Popular

Banco Popular, a mid-sized Spanish bank, suffered a 21 per cent rise in bad loans in the 12 months to September 2007 - a trend likely to be repeated throughout the banking sector as funding costs rise and the Spanish economy slows, dragged down by a troubled real estate sector.

"We are reducing our exposure to the real estate sector," José María Lucía, Popular's chief executive, said on Wednesday as he reviewed the bank's third-quarter results. "We haven't closed the credit tap for real estate developers, but we are being more prudent and selective in whom we finance," he said. "It is inevitable that bad loans will rise as the economy slows, but we will do everything to maintain loan defaults within reasonable levels," Mr Lucía said.

Big Spanish banks are unfazed by market turbulence

On Oct. 3, Banco Santander successfully sold €7 billion worth of bonds to 129,000 retail investors to finance the acquisition of the Dutch bank ABN AMRO. The $9.9 billion in bonds were sold through the bank's branch network, which handles its private banking clients, and the average amount purchased by each investor was about €54,000.

On the same day, Banco Bilbao Vizcaya Argentaria introduced a mortgage-based financial product that provides home owners over the age of 65 a lifelong income, paid monthly, based on the value of their home and their age, in exchange for the property - which they could continue to occupy.

Spain house prices rise at slowest rate since '98

Spanish house prices rose 5.3 percent in the third quarter, the slowest pace since 1998, government data showed on Wednesday, marking a gradual slowdown in one of Europe's hottest home markets.

Price growth was down from 9.8 percent a year ago and below the 5.8 percent increase in the second quarter but ahead of most private sector analysts' expectations.

UK agents say Costa del Sol most difficult area for Spanish property sales

An opinion poll of 100 real estate agencies in the UK has come back with worrying figures for Málaga province: 53.9% of those asked said their biggest problems for selling homes in Spain was on the Costa del Sol.

In the survey carried out by Richmond Green Marketing consultants, only 11% said their greatest problems were on the Costa Blanca, 4.4% in Murcia, and just 3.3% on the coast of Almería.

La Opinión de Málaga reports the main reasons for advising British clients against buying in Spain - and also why the Brits want to sell up their homes here - as high prices and more competitive markets elsewhere in the world, together with the recent corruption cases which have come to light.

Spanish Real Estate companies in crisis

Three in ten real estate agencies in Spain are set to close this year, as the sector enters into a crisis following a fall in demand. It’s now forecast that there will be a 20% fall in sales this year, and the construction of new property will be 2.5% lower.
The President of the Network of Real Estate Experts REI, Eduardo Molet, has said that his has been on the horizon since the start of 2007 and will continue until the end of the year. He said that more than a third of the 60,000 real estate promoters in Spain will have problems next year. A survey from the network says that as many as 75% of agencies could close between 2009 and 2014.

Llanera Properties To Be Completed

The first major casualty of the slowdown in property sales in Spain has been Llanera, an important developer. Among the projects it was working on that have been affected by the firm's collapse are 124 subsidised properties (for Spaniards on low incomes) in Alfara del Patriarca in Valencia, 75% of which have already been sold. Banco de Valencia has confirmed that it had granted Llanera 12 million Euros of funding and would maintain its financial support of the development. Another Spanish bank, Caja del Mediterráneo (CAM), has arranged to continue financing another Llanera project, again in Valencia.

Spain Property Delinquencies May Jump

Spanish property loan delinquencies may increase as much as 15-fold by the end of 2008 as interest rates rise, Moody's Investors Service said in a report. Loan-payment arrears by developers and builders may reach 5.5 percent of total property loans from the current 0.37 percent, according to the New York-based ratings company. The increase would mark a ``soft landing'' for Spain's 12-year property boom, Moody's said in a report called `Spanish Banks and Real Estate.' After rising 178 percent between 2000 and 2006, more than any other country in Europe, Spanish home prices are being threatened as the highest European Central Bank interest rates in six years curb consumer spending, Moody's said.