Spanish 100 percent mortgage Spanish bank sold for one euro. Santander bank’s takeover of Spain’s last provider of 100 percent mortgages in Europe’s latest bank rationalisation may be blessing in disguise for 1,000s of would-be international property buyers.
Banco Popular, with €37 billion worth of bad loans and unwanted properties on its books, was likely to fail, following recent stress tests by the European Central Bank (ECB). Popular has struggled with growing losses and customers withdrawing deposits in a run that has seen €billions pulled in recent weeks.
Santander bought it lock stock and barrel for one euro in a deal approved by the ECB and the Single Resolution Board (SRB), the EU Brussels body that was established two and a half years ago to deal with banking collapses.
For three years Banco Popular has been offering low interest 100% deals on all the resale and new properties in its portfolio, attracting wide interest from international buyers. But disorganised customer service from its 1,400 branches, and a badly operated property subsidiary promoting the deals was “clunky and not fit for purpose.” This resulted in a successful purchase for only one in three potential buyers – with hundreds left angry and frustrated.
Many Spanish estate agents, approved to offer the 100% mortgage deals, also found the bank’s purchase management system unable to cope with the demand and ditched their contracts. “The way the management ran the property side was a disgrace,” said one who pulled out last month.
International brokers, Walkerspain.com produced a better organised purchase management service “flexible enough to plug into the bank admin at points where it was performing best” and managed a 100% mortgage approval in 22 days from inquiry and a completion date at the notary for a week later. Normally that would have been 10-12 weeks for approval and a further 8-10 weeks for conveyancing.
The Banco Popular brand is to be replaced by Santander, but the future of the low interest 100% mortgage deals is likely to be resolved quickly as there are many potential buyers stuck in the purchase pipeline. The loan debt has been written down and Santander needs to raise €7bn in a rights issue to produce capital needed to shore-up Popular’s finances.
Santander plan to dispose of half Popular’s properties within a year – which suggests the bargains will remain, but how generous will be the mortgages?
:: Written by Kevin Barnett, international property writer