Follow Spain Investment Immigration and Spain Economic news: As the Eurozone economy recovers, foreign investors are flocking to Spain to purchase its bad bank debts.
Insiders reveal that Spain's Sareb bank attracted 30 bidders when auctioning a portfolio of non-performing housing mortgages code-named Abacus, valued at 300 million euros.
Current bidders include several private equity firms from the United States: Lone Star, Apollo, Cerberus, Centerbridge, and Fortress.
This bank was appointed by the government earlier this year to manage 50 billion euros of toxic assets, and this auction marks the first concentrated auction by the bank since then. Insiders expect the bank to complete the transaction by the end of the year.
Insiders also disclosed that Spain's Sabadell bank attracted over 40 bidders when auctioning a portfolio of consumer loans and credit card debts valued at 650 million euros, but the bank subsequently reduced the number of bidders to 30.
Both banks are unwilling to disclose specific details of the auction plans. However, the non-performing loans auctioned by these two banks are merely the "tip of the iceberg" of Spain's bad loans.
The recovery of the Spanish economy has significantly increased investor interest in Spain—Spain's GDP, after experiencing nine consecutive quarters of decline, saw growth of 0.1% in the third quarter of this year.
On Tuesday, Bill Gates acquired 6% of a Spanish construction group for 113.5 million euros. Spain's Minister of Industry, José Manuel Soria, stated that this is a recognition of the recovery of the Spanish economy. American private equity firms are "recruiting" in Spain, waiting for the asset sell-off by the country's banks. They have prepared 90 billion dollars in cash to purchase non-performing loans in Europe.
However, private equity firms still need to wait, as European banks currently lack the capacity to bear the hidden capital losses from selling bad debts.
Experts from PwC indicate that since the beginning of the year, Spanish banks have sold 9 billion euros in loans, matching last year's total sales. In 2010, the total amount of loans sold by banks was less than 1 billion euros.