Spain Makes Banks Pay Double To Deposit Guarantee Fund

 

The Spanish government Friday said it has approved a decree that will make banks more than double their contribution to the Spanish deposit guarantee fund, a measure aimed at getting lenders to shoulder a bigger part of the cost of financial sector restructuring. Under the new legislation, banks will have to pay an annual fee of 0.2% of the deposits they hold into the deposit guarantee fund, up from between 0.06% and 0.1% now. Finance Minister Elena Salgado said she expects banks to contribute EUR1.5 billion to EUR1.6 billion to the fund per year after the change. "The restructuring of the financial system will have zero cost for the tax contributor, and today's law reinforces that idea," Salgado said at a press conference following the outgoing Socialist government's weekly cabinet meeting. The move follows a recent government initiative to merge the deposit guarantee fund of the commercial banks with that of the savings banks, and use its funds to cover losses resulting from sector cleanup, part of a wider plan to slash a gaping government budget deficit. The deposit guarantee fund currently holds a total of EUR6.59 billion. The move didn't go down well with bankers. The AEB, a banking association which represents Spain's commercial banks and not the savings banks, said it is "surprising and unfair" that the banks are being forced to pay more to the fund. Until now, none of the listed banks has taken state aid, while several savings banks have been bailed out. Economists and analysts are concerned that the mounting cost of the cleanup of Spain's ailing banks will undermine Spain's efforts to bring down the deficit. Spain's state-backed Fund for Orderly Bank Restructuring injected EUR7.55 billion in its banks to help them meet new minimum capital requirements the government set earlier this year. This comes on top of around EUR10 billion the FROB earlier provided to banks. But the total amount falls far short of the capital needs estimated by many independent analysts. Just last month, the Bank of Spain seized Banco de Valencia SA (BVA.MC), a lender with EUR24 billion in assets that like many Spanish lenders had made big and ultimately fatal bets on lending to real-estate developers. That took the tally of nationalized banks to seven since 2008, after a massive real-estate bubble burst. Only two of these have so far been auctioned off. The Bank of Spain next week is expected to finalize the auction of Caja de Ahorros del Mediterraneo (CAM.MC), by handing it over to midsized lender Banco de Sabadell SA (SAB.MC). Central bank Governor Miguel Angel Fernandez Ordonez recently called CAM "the worst of the worst" of the country's ailing banks, and is offering the buyer sweeping guarantees against future loan losses resulting from its exposure to the real-estate sector. The prime minister elect, Mariano Rajoy of the conservative Popular Party, has said cleaning up the banking sector is one of his main priorities when he assumes power later this month, though he has yet to spell out how he plans to conduct this cleanup

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Hundred million euro plan to expand Marbella port gets go ahead

 

109 million euro plan to expand Marbella’s fishing port has finally been given the green light. The long planned transformation of La Bajadilla into one of the most luxurious marinas on the Mediterranean can now take shape after the Junta de Andalucia, Marbella town hall and The Nasir Bin Abdullah & Sons Consortium signed a contract allowing construction to begin. The move comes just weeks after the Andalucian High Court overruled objections to the scheme – submitted by Sheikh Abdullah Al-Tani, a member of the Quatari Royal family and owner of Malaga CF – that it would cause irreversible damage to Marbella. Work will now being within six months and will see the port undergo intense renovation and rescaling to make it ready to receive cruise liners and other large ships. In particular the plan, which is expected to take four years to complete and will create 750 jobs, includes a commercial area of 23,000 square meters, car parking with around 250 spaces, a five star hotel and three times the current number of moorings. It marks the first public private partnership to finance a sports marina in Spain and will give the contractor development rights for 40 years. According to the mayor of Marbella, Angeles Munoz, the scheme will also attract other projects to the Costa del Sol town and is particularly welcome in the current economic climate. “It is a great opportunity not to be missed,” she said.

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Marbella has suffered from a scandal that has blighted the town for a decade.

Eighteen thousand homes were built illegally by developers during the boom years up to 2006 and thousands of people bought them in good faith. The Marbella administration has sought to resolve the issue by fining the developers and devising a plan that effectively legalises 17,500 homes. Where developers cannot be found, homeowners pay the fine.

Until now, the Andalucia regional council, within whose jurisdiction Marbella lies, had opposed the town council’s policy of legalising illegally built homes. However, the Andalucian authorities have announced they will issue a decree before the end of December agreeing to allow illegally built homes to remain standing.

However, Marbella and Andalucia agree that 500 homes remain illegal because they break multiple laws. The courts want them demolished, but Marbella’s town council is reluctant to destroy them.

“The politicians don’t want to be seen putting people out of their homes,” says Campbell Ferguson, director of Survey Spain Network of Chartered Surveyors. He advises buyers to consult a lawyer before putting in an offer on a property to find out whether it was licensed or has any fines attached to it.

Laurent Coulée, sales director at Fine & Country estate agents, says; “While nothing was built for the last five years, in the last few months we have seen some villas being constructed.”

Sierra Blanca Estates is building 36 apartments at its Reserva de Sierra Blanca scheme in the north of the town. Prices start at €1.15m for the three-bedroom apartments which are scheduled for completion in 2013. Half have been sold off-plan, with Russians the biggest buyers. Coulée says developers are gaining confidence from five infrastructure projects, three of which are under way.

First, the San Pedro Bypass, which is scheduled for completion in early 2012, will divert traffic from Marbella city centre, relieving congestion during busy summer months. Second, Marbella’s beach promenade, the Paseo Maritimo, is undergoing €10m of upgrades and extensions. Third, Malaga Airport, where a third terminal opened in March 2010, is scheduled to have a second runway completed in the first three months of 2012.

Other infrastructure schemes include the redevelopment of Marbella’s La Bajadilla marina and fishing port. Qatari developer Nasir Bin Abdullah & Sons wants to build a €400m marina with 858 moorings, including six for super-yachts, and a 200-metre pier for cruise liners. It will build shops, bars, restaurants and a five-star hotel to line the quayside and at least four blocks of apartments, by 2015. The town hall is an enthusiastic supporter of this project because it believes it will help Marbella compete with rival tourist destinations, the Côte d’Azur and Sardinia.

Also in the pipeline is a plan to extend Malaga’s commuter railway from Malaga Airport to Marbella, giving visitors and residents an alternative to travelling by road.

Assuming all five schemes are completed, Coulée says their effect on the town’s property market will be transformative. The transport schemes would make it easier for holiday homeowners to access Marbella, while the new marina would draw tourists, providing opportunities to rent out properties, he says.

Despite renewed demand, Marbella remains a buyers’ market. In prime areas, such as the city centre and along the Golden Mile, a stretch of dual carriageway lined by hotels, luxury homes and businesses, property prices need to be 40 per cent below 2006 valuations to make them saleable, says Barbara Wood of buying agency The Property Finders. If the market continues to follow the pattern of previous downturns, prices will flatline in 2012 and 2013 before rising in 2014, she forecasts.

Kristina Szekely, owner of Kristina Szekely Sotheby’s International Realty, says the eurozone crisis, coupled with Spain’s economic and debt problems, is having a negative effect on the Marbella market, but that some buyers are taking advantage of this to buy properties at relatively low prices.

Coulée says Swiss and Scandinavians are buying Marbella homes to take advantage of the fall in value of the euro relative to their national currencies. Other buyers come from Spain, Britain, Russia, Qatar and Dubai, and tend to be cash buyers who do not need a mortgage.

La Casa Loriana is on the market for €50m

Buyers have some interesting properties to choose from. Fine & Country is marketing what it says is Spain’s most expensive home, the €50m La Casa Loriana which overlooks the Marbella beach and promenade. The main house, guest house, beach house and staff villa provide 4,000 sq m of accommodation, including 10 bedroom suites. Features include two swimming pools, a cinema and sweeping driveway.

Marbella’s developers and estate agents are celebrating the Popular party’s general election success in November because they believe the conservatives will support the town’s infrastructural improvements and that they may extend the previous Socialist administration’s temporary VAT cut on newly built homes. Whether that will keep housebuilders at work while the eurozone debt crisis takes its toll on Spain’s economy remains to be seen.

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