Good news for expats living at the Costa del Sol: investors
who were sold high risk bank debt are to be compensated, according to a government
decree. Particularly small investors, who were duped into buying risky debts
they thought were low-risk investments will get some form of compensation via the
Deposit Guarantee Fund.
The Spanish government issued a decree this week that aims
to help tens of thousands of people. Speaking at a news conference, Deputy
Prime Minster Soraya Saenz de Santamaria confirmed holders of such debt vehicles
– referred to as preference shares –
will be given bank shares in exchange. At the moment, the decree only covers
nationalised banks, not all of which are listed. It remains to be seen how
Spain’s government will use money from the Deposit Guarantee Fund to make
shares liquid.
Meanwhile, property investors still looking for bank-owned
bargains in Malaga, Marbella, Estepona or Fuengirola at the Costa del Sol will
be cheered by the news that Spain’s “bad Bank”, or Sareb as it is officially
known, is to pursue an aggressive timetable for the liquidation of its EUR 50
billion property portfolio. Over the next five years, Sareb aims to sell off
some 42,500 housing units, representing around 50% of its overall portfolio.
Prices for Spanish homes are still falling, with predictions
for demand this year being called “sluggish” at best. However, for people who
have long wanted to own a holiday or second home in Marbella, this is a good
time to start shopping around. Many experts argue that once banks begin to sell
off their portfolios, the market will establish a “rock-bottom” floor for
prices, which in turn will bring more large scale investors to the fore and
kick-start a wider recovery.
This year, so the country’s Finance Minister Luis de
Guindos, Sareb is aiming to shift approximately EUR 1.5 billion worth of
property. Property investors had to shave a percentage point of their annual
return expectations, from 15% to around 13%, when Sareb issued a revised profit
forecast and five-year plan this week.
Sareb’s property portfolio includes 14,900 plots of land,
6,300 rented properties, 76,000 empty homes and 84,300 bad loans, which nationalised
banks have already transferred over.
Across Spain banking customers are disillusioned with a
system that sold risky debt to small scale investors, overcharged in property
transactions, mis-sold thousands of mortgages and is now responsible for wide-spread
repossessions and evictions. Old-fashioned bartering is making a comeback and
people are exchanging labour for food, where cash is short in supply.
In some areas plucky locals have set up “virtual” currencies
that allow the exchange of goods and services without hard cash. While bankers
still argue over whose fault the sovereign debt crisis really is, people financially
bruised by the consequences of a failed banking system are turning to age-old
methods to get their own back.
Based on an alternative lifestyle and the Local Exchange
Trading System (LETS) idea, several Spanish groups have sprung up that allow
members of a barter group to exchange an hour’s work for what is the equivalent
of one Euro. Growing interest in schemes that turn away from banking and
embrace new ways of doing business are not just springing up in Spain. In
Bristol in the UK, business communities are already participating in the
Bristol Pound, that ensures locally generated money stays within the community
and doesn’t pass over the threshold of banks.
Residents in Marbella, Nerja and greater Malaga are already
members of a 600-strong group called Ecologistas en Acción, which uses the
virtual “Malaga Común” as their currency. The group incorporates musicians and
web designers, builders, translators and computer experts, domestic helpers and
organic gardeners among many other professions. Thus, doing up one’s property
in Marbella may no longer require a bank loan.
What was once a traditional way of life in the Spanish countryside
is now becoming part of daily life at the Costa del Sol: life without banks is
possible, it just needs a willing community to take a hands-on approach.