Transfer of NPLs to Sareb Lowers NPLs in Spain's Banking System

If one were to merely cursorily glance at the headlines, one would be under the impression that NPLs in Spain have finally begin to decline. For instance, the WSJ entitled its article on the topic “Spain's Bad Loans Drop Sharply”. Only if one bothers to actually look at the article itself does it become clear that NPLs have not really dropped, but have merely been shifted to the 'bad bank' set up by Spain's government.


“The Bank of Spain said Monday that bad debts held by the country's banks dropped sharply in December from November because of the transfer of lower-quality credit portfolios to the so-called bad bank that started operations that month.

Nonperforming loans fell by €24.1 billion ($32.20 billion) to €167.4 billion, or 10.4% of total outstanding loans, in December, preliminary data from the central bank showed. That compares with a bad-loan ratio of 11.4% in November, the highest ever recorded.

At the same time, total loans shrank to €1.604 trillion from €1.683 trillion, largely the result of loan reclassifications after the lower-quality loans were passed on to SAREB, as the bad bank is known, the Spanish central bank said in a statement.

Spanish banks, reeling from the crash of a decadelong housing boom, are expected to transfer around €60 billion worth of impaired assets to the bad bank. This was created as part of a deal to receive €39 billion worth of European Union aid for the country's troubled banking sector.

Until November, bad loans had risen for 20 months in a row as a result of soaring defaults by home builders and fast-rising unemployment. Eight banks are due to receive €38.87 billion through a European Union credit line that was extended to the Spanish government last year to bail out the country's troubled banks.”


(emphasis added)

However, does this mean that there has actually been a genuine reduction in bad loans? After all, the figure cited above – namely that bad loans fell by € 24.1 billion – doesn't tell us how many loans were actually transferred. In order to find this out, one has to consult a recent Exane research report on Spain's banks. It contains the following table and chart. Note that the table sums up the bad loans transferred by the end of 2012.



Assets to Sareb


NPLs transferred by Spain's banks to Sareb in late 2012.



As the chart of the NPL percentage indicates, this should lead to an equivalent drop in the percentage, ceteris paribus:



NPL ratio

Spain's NPL ratio, before and after the transfer of bad loan assets to Sareb – click for better resolution.



If we interpret all the above data points correctly, the only conclusion one can come to is that bad loans in the Spanish banking system have not declined, but have actually increased further – namely by about €12.5 billion.

€36.695 billion in loans were transferred, but the overall decline in bad loans amounted only to € 24.1 billion. It follows logically that the difference between these two numbers represents the actual increase in bad loans in the system.

Of course one may well regard the assets now held by Sareb as being 'outside' of the system. However, the point remains that these are bad loans, regardless of who holds them. Thus the increase in NPLs in Spain apparently continues unabated.



Charts by: BNP-Paribas / Exane


Emigrate While You Can... Learn More



Dear Readers!

It is that time of the year again – our semi-annual funding drive begins today. Give us a little hand in offsetting the costs of running this blog, as advertising revenue alone is insufficient. You can help us reach our modest funding goal by donating either via paypal or bitcoin. Those of you who have made a ton of money based on some of the things we have said in these pages (we actually made a few good calls lately!), please feel free to up your donations accordingly (we are sorry if you have followed one of our bad calls. This is of course your own fault). Other than that, we can only repeat that donations to this site are apt to secure many benefits. These range from sound sleep, to children including you in their songs, to the potential of obtaining privileges in the afterlife (the latter cannot be guaranteed, but it seems highly likely). As always, we are greatly honored by your readership and hope that our special mixture of entertainment and education is adding a little value to your life!


Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke


3 Responses to “Bad Loans Drop in Spain – Seemingly”

  • mc:

    Unfortunately, as in just about every bubble, the rush of cheap money is so great that anything and anywhere ends up with a building on it regardless of the suitability. The reason so many of these loans are bad is that so many of the assets backing them are junk. Many of the failed projects were maintenance intensive and thus rapidly degrade, such as golf courses, airports, apartment complexes, and tourism projects. The big Spanish banks sitting on this pile of now-dubious assets went international, sloshing their money around where they had never been before. Santander was buying small regional mortgage lenders in the US and Japanese retail banks.

  • I have heard some of Spain is pretty nice. They giving good deals on homes yet?

    • jimmyjames:


      I’ve just recently read “somewhere” from a Spaniard that seemed to have a good handle on it–most of the houses built in Spain during the mania have a high ask and no bid-because they are falling apart because of no building code enforcement-
      If I can remember where–I will post the link-

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • 5-cotmmrangegc03Ganging Up on Gold
      So Far a Normal Correction In last week's update on the gold sector, we mentioned that there was a lot of negative sentiment detectable on an anecdotal basis. From a positioning perspective only the commitments of traders still appeared a bit stretched though, while from a technical perspective we felt that a pullback to the 200-day moving average in both gold and gold stocks shouldn't be regarded as anything but a normal - and in this case actually long overdue -...
  • gold_bullionGold Sector Correction – Where Do Things Stand?
      Sentiment and Positioning When we last discussed the gold sector correction (which had only just begun at the time), we mentioned we would update sentiment and positioning data on occasion. For a while, not much changed in these indicators, but as one would expect, last week's sharp sell-off did in fact move the needle a bit.   Gold - just as nice to look at as it always is, but slightly cheaper since last week. Photo via The Times Of India   The commitments of...
  • wryAustralian property bubble on a scale like no other
      Australian property bubble on a scale like no other Yesterday Citi produced a new index which pinned the Australian property bubble at 16 year highs:   Bubble trouble. Whether we label them bubbles, the Australian economy has experienced a series of developments that potentially could have the economy lurching from boom to bust and back. In recent years these have included:    the record run up in commodity prices and subsequent correction;  the associated...
  • andy-duncan-and-claudio-grassA Looming Banking Crisis – Is a Perfect Storm About to Hit?
      Andy Duncan Interviews Claudio Grass Andy Duncan of has interviewed our friend Claudio Grass, managing director of Global Gold in Switzerland. Below is a transcript excerpting the main parts of the first section of the interview on the problems in the European banking system and what measures might be taken if push were to come to shove.   Andy Duncan of (left) and Claudio Grass of Global Gold (right)   Andy Duncan: How do you see the...
  • urban_ii_croppedPope Francis: Traitor to Western Civilization
      Disqualified There has been no greater advocate of mass Muslim migration into Europe than the purported head of the Catholic Church, Pope Francis.  At a recent conference, he urged that “asylum seekers” be accepted, “through the acts of mercy that promote their integration into the European context and beyond.”*   Before we let Antonius continue with his refreshingly politically incorrect disquisition, we want to remind readers of two previous articles that have...
  • "What if we don't change at all ... and something magical just happens?"Prepare for the Unthinkable
      Red Ink Growth and profits mask a variety of problems.  They hide business inefficiencies and the money suck of corporate adminis-trivia.  They also conceal unproductive staff.   The final career leap   But most of all growth and profits obscure the extreme value subtracting forces of bloated management teams.  During good times it is unclear what these smug fellows do.  During bad times it is lucidly clear that most of them ain’t worth a darn. When the...
  • spankinggoodtimeUS Stock Market - a Spanking May be on its Way
      Iffy Looking Charts The stock market has held up quite well this year in the face of numerous developments that are usually regarded as negative (from declining earnings, to the Brexit, to a US presidential election that leaves a lot to be desired, to put it mildly). Of course, the market is never driven by the news – it is exactly the other way around. It is the market that actually writes the news. It may finally be time for a spanking though.   Time for some old-fashioned...
  • fischersDoomed to Failure
      Larded Up and Larded Over We’ve been waiting for the U.S. economy to reach escape velocity for the last six years.  What we mean is we’ve been waiting for the economy to finally become self-stimulating and no longer require monetary or fiscal stimulus to keep it from stalling out.  Unfortunately, this may not be possible the way things are going.   As Milton Jones once revealed: “A month before he died, my grandfather covered his back in lard. After that, he went...
  • larry-1Meet Your New Stimulus Allocation Czar
      March Towards Midnight The march towards midnight is both stirring and foreboding.  Like a death row inmate sitting down to savor his last meal, a grim excitement greets the reality of impending doom.  Thoughts of imminent mortality haunt each bite.   Tic-toc, tic-toc...   As far as the economy’s concerned, there’s no stopping its march towards midnight.  The witching hour’s rapidly approaching.  We intend to savor each moment and make the best of...
  • state_police_980_600_s_c1_t_c_0_0_1Are the Deep State’s Drones Coming for You?
      What’s Aleppo?   Look out kid Don’t matter what you did Walk on your tip toes Don’t try "No Doz" Better stay away from those That carry around a fire hose Keep a clean nose Watch the plain clothes You don’t need a weather man To know which way the wind blows – “Subterranean Homesick Blues,” Bob Dylan   The entrance to Baghdad's “Green Zone”. Photo credit: Karim Kadim / AP   DELRAY BEACH, Florida – Biggest foreign policy blunder...
  • speculatorInterview with Doug Casey
      Natalie Vein of BFI speaks with Doug Casey   Our friend Natalie Vein recently had the opportunity to conduct an extensive interview with Doug Casey for BFI, the  parent company of Global Gold. Based on his decades-long experience in investing and his many travels, he shares his views on the state of the world economy, his outlook on critical political developments in the US and in Europe, as well as his investment insights and his approach to gold, as part of a viable strategy for...
  • where-to-goThe Bamboozled Middle Class
      Gassy and Bloated BALTIMORE – What a great time for an observer with a sense of mischief! This year’s presidential campaign is the most absurd and remarkable we have ever witnessed. After more than two centuries, Americans are finally getting the democracy they deserve – one that is grotesque... slimy... and immensely entertaining, albeit in the mud-wrasslin’ genre.   The mud-wrestlers – well, we did promise you in these pages it would be entertaining like never...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank




Realtime Charts


Gold in USD:

[Most Recent Quotes from]



Gold in EUR:

[Most Recent Quotes from]



Silver in USD:

[Most Recent Quotes from]



Platinum in USD:

[Most Recent Quotes from]



USD - Index:

[Most Recent USD from]


THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Buy Silver Now!
Buy Gold Now!