'Bad bank' debts

SAREB is Spain's so-called "bad bank" set up to absorb and manage problem loans and assets from struggling lenders. It was created as a vital cog in cleaning up the country's financial system after Spain's property bubble burst in 2008.

SAREB raised €14.1 billion (about $18 billion) from the sale of subordinated bonds. The funds are being used so the bad bank can absorb a second batch of bad loans and take on further problem assets.

Four nationalised banks, including Bankia, transferred bad loans to SAREB last month. The article also notes four other troubled lenders were due to transfer billions more by Thursday.

Last month four nationalised banks transferred €36 billion in bad loans to SAREB. A second batch of transfers from four other troubled lenders was expected this week, as part of ongoing cleanup efforts.

SAREB is expected eventually to take on €55 billion in problem loans and assets, according to the article.

Removing bad loans from bank balance sheets helps nationalised and troubled lenders improve their financial positions. For everyday investors, that cleanup aims to increase transparency and stability in Spain's banking system after the 2008 property crash.

SAREB sold subordinated bonds to raise the €14.1 billion needed to absorb additional bad loans. The bond sale provided immediate funding to support the bad bank's next round of asset transfers.

Yes — the article says SAREB used the bond proceeds to absorb a second batch of bad loans this week, and four other troubled lenders were expected to transfer billions more by Thursday as part of the ongoing cleanup.