A Valuation of SAREB, the Spanish “Bad Bank”, Upside Using the Real Options Methodology

Roux Martinez, Felix Eduardo and Ruiz López, Felipe and Eguren Segurado, Santos (2013). A Valuation of SAREB, the Spanish “Bad Bank”, Upside Using the Real Options Methodology. In: "7th International Conference on Industrial Engineering and Industrial Management - XVII Congreso de Ingeniería de Organización", July 10-12th, 2013, Valladolid. ISBN 978 -84 -616-5410-9. pp. 17-24.

Description

Title: A Valuation of SAREB, the Spanish “Bad Bank”, Upside Using the Real Options Methodology
Author/s:
  • Roux Martinez, Felix Eduardo
  • Ruiz López, Felipe
  • Eguren Segurado, Santos
Item Type: Presentation at Congress or Conference (Article)
Event Title: 7th International Conference on Industrial Engineering and Industrial Management - XVII Congreso de Ingeniería de Organización
Event Dates: July 10-12th, 2013
Event Location: Valladolid
Title of Book: Book of Proceedings of the 7th International Conference on Industrial Engineering and Industrial Management - XVII Congreso de Ingeniería de Organización
Date: 2013
ISBN: 978 -84 -616-5410-9
Subjects:
Freetext Keywords: Bad Bank, Real Options, Valuation, Financial Crisis, Real Estate.
Faculty: E.T.S.I. Industriales (UPM)
Department: Ingeniería de Organización, Administración de Empresas y Estadística
Creative Commons Licenses: Recognition - No derivative works - Non commercial

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Abstract

This paper develops a model to analyze the upside potential of profitability of the SAREB (“Asset Management Company for Assets Arising from Bank Restructuring”), the Spanish “Bad Bank”. The model is based in the Real Options methodology, that is especially adequate due to the convergence of two elements, (i) depreciated assets with a high upside potential, and (ii) a highly volatile market as it has shown to be the real estate Spanish market. Our results suggest that the SAREB has a higher than expected profitability potentialthat would be dedicated to increase the return to its shareholders, mainly private banks. Consequently we also show that after the financial crisis are emerging two types of banks in Spain, in one hand the losers who are transferring their real estate assets at a deep discount, and in the other hand the winners, capturing the upside potential of those assets as shareholders of SAREB, and consequently consolidating their strength in the Spanish Real Estate Industry. It is worth to mention that Governments should make an effort in properly redistribute the wealth generated by the real Estate industry.

More information

Item ID: 36962
DC Identifier: http://oa.upm.es/36962/
OAI Identifier: oai:oa.upm.es:36962
Official URL: http://www.insisoc.org/CIO2013/es/book_of_proceedings.html
Deposited by: Memoria Investigacion
Deposited on: 07 Apr 2016 15:05
Last Modified: 24 Feb 2017 15:37
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