New Prime Minister Rajoy is on a clean-up mission, report Fluent Finance Abroad.
Independent Mortgage Consultant and Owner of Fluent Finance Abroad, Marc Elliott, explains:
“You have to remember that Spain has only been a fully-fledged capitalist democracy for 32 years, and without the infamous dictator Franco for 36, so its banking and mortgage systems have had comparatively less time to mature. As the property market boomed, many banks took a naïve approach to lending money and they are suffering for it now.
"Whilst the UK has various checks and balances in place to prevent the recurrence of scandals such as the endowment mortgage mis-selling of the 80s and 90s, Spain has yet to get a watertight grip of its financial products although Rajoy is making huge strides.
“Whilst Spain didn’t have ‘official’ subprime mortgages in the same manner as the US, throughout the late 2000s it did fall victim to unrealistic mortgages being handed out by greedy banks with the help of unscrupulous mortgage advisers, real estate agents, lawyers, surveyors, valuers and accountants.
"Local newspapers bore adverts offering fake P60s for credit purposes and many people took advantage. The consequence today is banks having to repossess a significant number of homes making them huge real estate owners and putting a strain on their balance sheets – particularly as Rajoy is asking banks to make additional provisions.
" The Government is forcing takeovers and mergers – Banco Sabadell acquired CAM bank for one euro in December 2011, BBVA acquired Unnim bank for the same price this month – in order to accelerate the clean-up.”
