SAREB DUE DILIGENCE. JACOBO SÁNCHEZ-ANDRADE Real Estate Department

Transcription

1 JACOBO SÁNCHEZ-ANDRADE Real Estate Department SAREB DUE DILIGENCE European Banking & Finance Team of the Year Equipo Europeo del Año en Bancario y Financiero

2 ÍNDICE 1 INTRODUCTION 2 STRUCTURE 3 DUE DILIGENCE CONSORTIUM 4 PLANNING 5 FINANCIAL ASSETS REVIEW 6 REAL ESTATE ASSETS REVIEW 7 CHAIN REVIEW PROCESS 8 MAIN SETBACKS AT COMPLETING THE DD PROCESS

3 1 INTRODUCTION Unprecedented Due Diligence in Spain (200,000 assets for review!! Broseta 20,000 assets) Unprecedented collaboration and coordination among financial institutions and the entities involved in the Dd Consortium (Law firms, technological partner, valuators and auditor). SAREB is a private company established in November 2012 to assist the reorganization of the Spanish financial sector, in particular entities that dragged problems due to excessive exposure to the property sector. The Memorandum (MoU) that the Spanish government signed in July 2012 with European Union SAREB determines the constitution as a condition for receiving financial aid. Thus, the agreement provides for the establishment of a management which transfer real estate assets of the some financial entities, with the aim to reduce the risks of them and orderly liquidate troubled assets. SAREB received nearly 200,000 assets worth million euros, of which 80% are financial assets and 20% real estate. Most SAREB capital is private, 55%, while 45% is held by Fondo de Restructuracion Bancaria (FROB). SAREB's mission is to divest the assets within 15 years, optimizing its value. 3

4 2 STRUCTURE GROUP 1 GROUP 2 FINANCIAL INSTITUTIONS TRASFERRING ASSETS TO SAREB: BFA-Bankia, Catalunya Banc, Nova Caixa Galicia Banco- Banco Gallego y Banco de Valencia BMN, Liberbank, Caja 3 y CEISS REAL STATE LOANS 4

5 3 DUE DILIGENCE CONSORTIUM LAW FIRMS ASSET VALUER TRANSFER PRICING DATA BASE 5

6 4 PLANNING THEORICAL PLANNING: 3 milestones From end February until March 15, 2013 DD of 1,500 most important assets (most representative Real Estate and financial assets, including secured syndicated loans) Until April 15, % of the assets evaluated. Until June 15, 2013 Rest of assets REAL PLANNING: 3 milestones Subsequent 2 milestones delayed and turned into : From end February until March 15, 2013 June November Successfully completed! 50% of the assets evaluated. Rest of assets 6

7 5 FINANCIAL ASSETS REVIEW Template of data-sheet specifically designated for the project by IBM with the assistance of Clifford Chance and SAREB to be filled Scope of the Loan DD exercise: Details of the Mortgage Warranties and Mortagage Liabilities, secured amount, pledges Amended Mortgage Loans Contingencies Confirmation on registration and valid existence of the mortgage 7

8 6 REAL ESTATE ASSETS REVIEW Template of data-sheet especifically designated for the project by IBM with the assistance of Clifford Chance and SAREB to be filled Scope of the Real Estate DD exercise (depending on the type of Real Estate asset): Registration information. Good title over the property and legal status of the property Planning permission review (especially for urban or rural Land assets) Property valuation Payment of Taxes linked to the Property Condominium 8

9 7 CHAIN REVIEW PROCESS FINANCIAL INSTITUTIONS SAREB DATA TAPE & IBM AXESOR (support to lawyers on registration information to be obtained from the Land Registries) LAWYERS In case of RE assets, the asset valuer visit the property and complete the data-sheet previously submitted by the lawyers. If there are discrepancies between the info obtained by the lawyers and the one gathered by the valuators, the data-sheet had to be returned to the lawyers to change its content. CBRE (ASSET VALUER) AUDITORS SAREB The report is used by SAREB for the commercialization of the assets within the market. 9

10 8 MAIN SETBACKS AT COMPLETING THE DD PROCESS There were difficulties in order to coordinate the different companies involved within the Consortium. Hard work done by Clifford to reconcile divergent interests!! The proposed time-planning was extremely ambitious and had to be reviewed and delayed in three different times. Incomplete and out-dated documentation given by the financial institutions: Banks did not have enough platforms in order to use them by the Consortium and in most cases the information was not organized and scanned. Banks did not have time to prepare technology resources to manage and share all the documentation. Continuous changes in the technology platform (data-sheets) specifically created by IBM. Loss of important information! Practical limitations of a project of this type. Many differences between the legal (lawyers) and physical status (valuators) of the assets, which meant a significant delay in completing the data-sheets. 10

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