Spanish bad bank Sareb has sued the country’s lenders such as Sabadell and Caixabank in a Madrid court over interest payments on debt portfolio.
Sareb, which has established to take bad loans from the financial crisis in 2012, is seeking to recover negative interest payments on its €34.5bn senior debt portfolio, Reuters has reported.
The lender took over real estate and other toxic assets worth more than €50bn from nine savings banks and issued a debt underwritten by the Spanish government.
Sareb has offloaded debt worth €15.9bn and still holds €34.5bn in senior debt, which is benchmarked to the three-month Euribor plus a spread that must not go over 2%.
Initially, Sareb had no debt floor, however after the interest rates turned negative in 2015, a debt floor of 0% was introduced in its issues.
At the time, the European Central Bank did not accept bonds with a negative coupon in its liquidity facilities as collateral. Later in 2017, the ECB started accepting bonds with a negative yield as collateral.
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Sareb’s demands include removing the debt floor and charging the Spanish banks for the negative interest on its senior debt.
In 2020, Sareb’s spokesperson said that the lender missed out on €145m in interest because of the 0% debt floor.
Commenting on the issue Caixabank said that the parties decided on the matter following the negotiation in October 2018.
“The decision was that the bonds should not accrue negative interest then or in the future,” the lender was quoted by the publication as saying.