June 22, 2018 / 1:36 PM / 9 months ago

Spain's banking deposit fund in talks with Sabadell, BBVA to simplify asset sales

MADRID, June 22 (Reuters) - Spain’s bank-funded deposit guarantee fund (FGD) is in talks with Banco Sabadell and BBVA to simplify toxic real asset sales, the deputy governor of Bank of Spain said on Friday.

Spain’s property market is enjoying a rebound but lenders are still working to sell real estate debt that soured during the financial crisis as the European Central Bank urges banks to remove non-performing assets from their balance sheets.

Banco Sabadell and BBVA are working to sell off real estate assets they inherited after they bought former Spanish savings banks CAM and Unnim guaranteed by asset protection schemes.

“The talks are going on, but they’re not over, we’re talking to them to see how we can simplify the protocols, so that it’s more of a simplified way of authorizing the sales of block portfolios instead of (selling) them asset by asset,” deputy Bank of Spain governor Javier Alonso said.

Under the terms set out by protection schemes, the FGD, which is financed by contributions from all Spanish banks, buyers are responsible for 20 percent of losses, with the rest being financed by the fund.

However, the FGD has to give its approval for those sales.

“The fund is also interested in, not only facilitating these operations to these lenders, but also limiting their final risk with the entities while trying not to affect the public deficit,” Alonso said.

Though the FGD is financed by banks, any potential losses must be accounted as part of the public deficit as it is a state institution, a source with knowledge of the matter said.

Banco Sabadell is in talks to sell four toxic real estate asset portfolios worth around 10.8 billion euros ($9.3 billion), of which 6 billion euros were part of assets subject to the asset protection scheme.

In November, BBVA agreed to sell 80 percent of its real estate business to U.S. fund Cerberus for a gross value of 13 billion euros, a deal which is expected to close in the third quarter. (Reporting By Jesús Aguado; editing by Keith Weir)

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