Friday, August 03, 2012

Banks need money not land

The 1,090,000 euro loan that Raúl Valerio Medina had negotiated with Caja Rural Central was apparently to refinance debts that the town had with the bank from 2006. The aim was to reduce payments the town had to make. Land, which now forms part of the sports centre, was used as security for the loan. 

The new government team failed to make payments to Caja Rural Central for the last six months which has triggered off a claim to the courts for 1,480,000 (the original sum plus interest). Instead of claiming the land, the bank are asking the judge to withhold state transfers to the town until the whole debt is paid off.

In order to stave off this action, the mayor, Charo Bañuls  has offered land and parking spaces in the town. Although, this offer will not cover the whole of the debt, she hopes that it will placate the bank. The mayor has already ruled out the idea of renegotiating the loan to extend it and reduce payments because of the excessive interest they would have to pay.

The caja banks in Spain are in a very sorry state. Only they know just how bad their situation is but for sure they hold a lot of toxic debt in the form of land and housing that they cannot sell. I imagine the last thing that Caja Rural Central want is land in Bigastro- what would they do with it other than grow artichokes and melons?

No comments: