Spain's bad bank is releasing its first batch of distressed property. Also known as Sareb, the bank is now marketing real estate seized from troubled lenders in an attempt to cleanse their books of toxic assets, the Financial Times reported. Some 13,000 properties once owned by Bankia are to be put up for sale, which is hoped to make a dent in the €37 billion worth of troubled real estate taken on by Sareb in December from the four nationalised banks.

Slashing the volume of distressed property in Spain is a vital part of the country's property and economic recovery, but many believe Sareb's latest move is slightly premature. The bad bank is still consumed by internal debates over its business plan and there are those that doubt its ability to deliver results.

Already the plan, which was drawn up just a few months ago, is being revised. A spokeswoman for Sareb explained to the Financial Times: "The business plan is being adjusted because of the evolution of the portfolio, as we now have all the details about what it contains."

While this change isn't expected to affect the projected annual return on equity of the bank, which is set at a target of 14-15 per cent, nor the discounts applied to the assets, there is concern among experts. A source revealed to the newspaper that new managers appointed by the Spanish government's bank restructuring fund had begun to raise doubts in mid-December 2012. At this time, private shareholders were attempting to assemble capital to plough into Sareb, but attempts to change the plan agreed on during this process is causing uncertainty.

Nonetheless, concern over the amendments is perhaps premature, with the European Commission, the European Central Bank and the International Monetary Fund stressing the importance of a long-term business plan that is based on updated information. It has also been revealed that the rate at which bad loans are increasing is slowing and confidence is returning to sector. Foreclosed properties began to move at the end of 2012 and Bankia announced that it raised €550 million (£475 million) from selling these units, Reuters reported.



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