The Bank of Spain has set out a strict calendar according to which banks must mark the value of their property holdings to current market prices, according to a note accessed by Spanish daily El Economista. Banks that do not update the valuations on their portfolios will be penalized with more provision requirements.
For healthy loans, every three years, banks will have to update the valuations on homes used as collateral and every year if the property is for commercial use.
For debt that is non-performing, sub-standard or to be refinanced, valuations must not be out of date for over a year, independent of property type.
If the property has already been foreclosed, the bank supervisor requires a complete individual valuation every three years instead of a statistical model-based one, El Economista explains.