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UPDATE 1-Spanish banks consider exiting capital of bad bank Sareb

(Adds quotes from Sabadell CEO, details on bad bank)

MADRID, June 23 (Reuters) - Spanish banks are considering exiting the capital structure of Spain’s bad bank, Sabadell’s chief executive said on Wednesday, as Sareb reconsiders its role given the sustained losses it has booked in recent years.

The institution, set up to take on bad loans from the financial crisis in 2012 and known by its Spanish acronym Sareb, has been struggling since its creation as a slump in real estate prices has depressed the value of loans and assets.

In 2020, Sareb booked a loss of 1.07 billion euros ($1.27 billion) while revenues fell 38% in a year marked by a 10.8% economic contraction in Spain because of the COVID-19 pandemic.

After being asked about potential plans by banks to leave Sareb’s capital, Sabadell’s CEO Cesar Gonzalez-Bueno said it “is an ongoing process and we have to wait for the outcome.”

“It was a key instrument in getting us out of the crisis of 2012 and its role is fulfilled, with some elements still pending,” Gonzalez-Bueno said at a financial event in Spain, echoing previous comments made by ECB vice-president Luis de Guindos at the same event.

On Monday, Spain’s Economy Minister Nadia Calvino stressed the need to work on a new strategy for Sareb for the coming years.

Two sources familiar with the matter told Reuters in May that Sareb’s shareholders - the state and the country’s main banks - were working with the government to find a way to allow them exit Sareb’s capital structure.

Spain’s state rescue fund FROB holds a 45.9% stake in Sareb, while the rest is owned mainly by banks, Santander being the largest private shareholder with a 22.2% stake. (Reporting by Jesús Aguado; editing by Jason Neely and Bernadette Baum)

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