Fidelidade completes the sale of Arya portfolio to US fund Cerberus

Cerberus is understood to have paid just below €125 million for a portfolio of five properties in Lisbon and Porto, including the current head of office of local insurer Fidelidade, which was the seller.

The portfolio consists of Fidelidade’s headquarters at Calhariz, with a total area of almost 20.000 sqm, Terminal K, at Santa Apolónia, with 6.600 sqm, the Marechal Saldanha building, with 2.300 sqm, the Malhoa 13 building, at Praça de Espanha, with 5.900 sqm, all in Lisbon and the Galeria de Paris, in Porto, with 12.800 sqm.

Fidelidade also has various central and subsidiary services installed in these buildings and it will remain its tenant until the construction works on its new headquarters at Entrecampos, in Lisbon are finished. This is where the company will concentrate all the services it has spread across Lisbon, «allowing it to consolidate the brand’s position through a new headquarters open to the community, designed with innovation in terms of environment, architecture, functionality and working conditions», explained the insurance company in a release.

Original Story: Property EU | Virna Asara
Photo: Property EU
Edition: Prime Yield

Greek banks shrank their bad loans pile by more than €15Bn in a year

By end-September Greece’s four systemic banks had reduced their bad loans by more than €15 Bn compared to the same time last year, trimming their nonperforming (NPL) credit to €74 Bn on a group level from €89.6 Bn at end-September 2018.

This has paved the way for a dynamic fourth quarter, by the end of which some significant sale and securitization transactions will have been agreed.

These include the securitization of Eurobank’s Cairo portfolio worth €7.5Bn and the sale of its FPS loan management offshoot expected by year-end, and the securitization of Alpha’s Galaxy portfolio of €12Bn along with the sale of Cepal in the first half of 2020. In 2020 Piraeus will carry out two transactions totalling €3Bn while the National will securitize loans equal to €3.5Bn.

Original Story: Tornos News |  News 
Photo: Photo by JonteRemos/
Edition: Prime Yield

Haya selected for the management of Sareb’s rental portfolio

Haya Real Estate, one of Spain’s market leader in nonperforming loans (NPL) and real estate asset management, has been selected by the Spanish band bank Sareb for the management of its rental portfolio, comprising more than 3,000 residential and tertiary rented assets.

The portfolio is made up of 80% residential assets and 20% of tertiary properties distributed throughout the Spanish geography. 40% of the assets are located in the Valencian Community, followed by Madrid Community, Castilla-León and Castilla-La Mancha, with 24% of the total portfolio, also, the South of Spain specially Andalusia and the Canary Islands, with 16%.

This new contract provides continuity to the rental management services that Haya has been delivering during the last years for Sareb. Efective from January 1st 2020, this asset management agreement is a strategic business line for Sareb, specially focused in adding value to the rental assets in the mid-term. The contract will last for two years.

This rental management contract is additional to the mandate granted in October 2019 by Sareb to manage the assets of the Esparta project, a €8.4 Bn (net book value NBV) portfolio of loans and REO (Real Estate Owned) up to June 2022.

Original Story: Eje Prime | News 
Photo: Haya Real Estate
Edition: Prime Yield

Cerberus buys Sertorius REO portfolio from Novo Banco

US based investor Cerberus has reinforced its presence within the Portuguese market, by taking the real estate portfolio «Sertorius» from Novo Banco for €450 million, 10% less than the amount initially demanded by the seller.

This portfolio includes more than 200 buildings located mainly in Lisbon and Setubal and also empty terrains and logistic, housing and commercial assets, most of them were inherited by the bank through distressed contracts.

Completed during the second semester of 2019, the deal was now announced by JLL, that acted as the seller’s advisor in a released recently issued, where the consultants pointed out «the growing dynamics in terms of trading large portfolios of real estate owned asset – REOs and non-performing loans- NPLs» over last year. 

The investment in this segment grew in line with the «strong» activity registered in 2018, and it should have amounted a total €6 Bn over in 2019, JLL says. The sale of Projecto Nata II, an NPL portfolio, to Davidson Kempner by Novo Banco for €3.3 Bn was a large contributor for this activity.

Original Story: Iberian Property | Vanessa Sousa 
Photo: Novo Banco
Edition: Prime Yield

Alantra advises Eurobank on the largest Greek public NPL securitization to-date

Greece’s Eurobank has completed its second public NPL (Nonperforming Loans) securitization, Project Cairo. This is the largest Greek NPL securitisation to-date, with a total GBV of €7.5bn is comprised of non-performing multi-asset loans at varying stages of restructuring and enforcement processes. Alantra Credit Portfolio advised the operation, acting as co-arranger and financial lead advisor to the deal.

This is expected to be also the first securitisation that will opt-in for Hellenic Asset Protection Scheme (“Hercules”), the Greek government recently approved HAPS guarantee scheme.

Cairo SPV will issue 3 classes of Notes’ notional amounts as per following: Senior Note €2.4 billion, Mezzanine Note €1.5 billion and Junior Note €3.6 billion. The Cairo transaction’s parameters have accounted for the estimated cost of Hercules and are subject to the targeted rating confirmation.

Eurobank will retain 100% of Senior Notes and will opt-in for the Hercules. Furthermore, it will retain 5% of Mezzanine and Junior Notes to comply with risk retention requirements.

20% of the Mezzanine Securitisation Notes and the minimum required percentage of the Junior Securitisation Notes will be sold to doValue S.p.A., the leading NPL servicer in Italy. The implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes corresponds to 33.3% of the total gross book value of the securitized portfolio.

75% of the Mezzanine Notes and 44.9% of the Junior Notes to be potentially distributed as dividend in kind to shareholders, subject, inter alia, to corporate and regulatory approvals.

The transaction took place in parallel with the disposal of part of FPS to doValue, which – adding FPS to its existing business in Italy and Spain – is set to establish itself as the top loan servicer and REO manager in South Europe. The Bank has recently sold portfolio Pillar to PIMCO, which will be also serviced by FPS along with the remaining €11.3bn performing and non-performing exposures that are still retained by Eurobank.

With this milestone agreement, Eurobank enters the final stages towards completion of its accelerated plan for the clean-up of its balance sheet and becomes the first Greek bank to turn the corner on the major legacy issue of the NPE stock. Together with Pillar, they are the first NPE securitizations in Greece and key components of Eurobank’s frontloaded NPE reduction strategy, which aims to achieve the targeted NPE ratio of below 15%.

«This transaction represents a landmark deal for the Greek Market, the inaugural NPL securitization to opt-in for the new Hercules asset protection scheme. We are proud to have played an instrumental part in it», Vasilis Kosmas, Partner of Alantra, commented.With an NPE pipeline currently sat at over €20bn across the Greek banking sector, Greek HAPS guarantee scheme approved, rising real-estate values, and re-worked borrower protection laws, the market is primed for another active year ahead.

Original Story: Webwire
Photo: Eurobank Site
Edition: Prime Yield  

Alpha Bank determined to turn the page of its NPL problem

Alpha Bank’s management has designed a strategy to reduce its NPL (Nonperforming Loans) problematic stockpile and transform the group so that it can «turn the page,» the lender’s CEO Vassilis Psaltis told Kathimerini, stressing that the Greek economy is on a steady growth path and that the international investment community is regaining faith in the country’s prospects.

In the same interview, Psaltis notes that the time has come to make up for the ground lost during the crisis, explaining that Alpha Bank will be at «forefront of this national effort, securing credit to households and businesses of €14 bn by 2022

A few weeks ago, the bank introduced Galaxy, the largest portfolio of NPLs in Greece to date which is set for securitization in 2020. And, according to the CEO, this plan «reflects Alpha Bank’s commitment to leave the problems of the crisis behind and “become a bank once again,” reasserting its leading role as a financier of households, businesses and the Greek economy».

«This is not just the most significant securitization of nonperforming exposures in Greece, but the third largest in Europe», Psaltis stressed, adding that this transaction will allow Alpha to reduce its NPE rate from 44% in 2019 « to below 20% in 2020 and eventually to a single-digit rate in 2022. The percentage of NPLs in default for more than 90 days will fall below 5% in 2022».

«We are decisively proceeding to a cleanup of our balance sheet in order to devote all our energy to what we are doing really well, which is banking and financing the economy», Alpha’s CEO asserted. However, he reckons that the «we are doing it now, not only because we have the experience and capital strength to aim high, but also because three crucial conditions are now being met: Supervisory authorities are urging similar initiatives, a dramatic improvement in macroeconomic figures has been recorded, one that brings our country to the very center of investment interest, and thirdly, Hercules, the Greek asset protection scheme, has been activated».

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Alpha Bank site
Edition: Prime Yield

Portuguese banks will keep reducing its NPL stock in 2020, S&P says

Portuguese banks will keep reducing their large stock of bad loans in 2020, as nonperforming loan (NPL) portfolios continue to interest investors seeking yield in a low interest rate environment, lenders write off loans and Portugal’s economic growth continues to outpace that of many of its European neighbors, S&P Global Market Intelligence analyists say.

However, the pace of decline will slow over the coming years as the size of the Portuguese market makes large ticket deals more complicated going forward, analysts said.

Portugal was bailed out to the tune of €78 Bn during the financial crisis, and while the banking sector was rescued through state intervention, it was burdened with one of the biggest bad debt piles in Europe. Despite banks’ combined gross NPL stock declining by about €9 Bn, or 32%, to €19 Bn in the first nine months of the year, according to DBRS Morningstar, Portugal still had one of the highest NPL ratios among European banks in the European Banking Authority’s latest transparency exercise.

S&P Global Market Intelligence data shows that NPL ratios at individual banks have been trending down over the past two years. Between the first half of 2017 and the first half of 2019, Millennium BCP’s almost halved to 5.74% from 11.02%, while that of Novo Banco, created from the “good bank” of the troubled Banco Espírito Santo group, fell to 24.96% from 39.86%. Caixa Geral de Depósitos, for which data was spottier, saw its ratio fall to 8.76% in the first half of 2019 from 13.19% in the second half of 2017. And Santander Totta was 5.60% in the second half of 2018, down from 8.18% in the same period of 2017. Banco BPI end-June 2019 ratio fell year over year to 4.52%, although it is up from the first half of 2017.

«In our view, NPLs will continue to fall in 2020,» DBRS Morningstar analyst Nicola de Caro said in an email. «Reducing NPLs and non-core assets remains a key priority for Portuguese banks, as the sector’s asset quality is still weaker compared to the European average

Banks such as Novo Banco have been selling off bad loan portfolios to foreign funds, who are seeking returns in the low interest rate environment.

«It is one of the positive impacts of the negative rate scenario that everyone is hunting for yield,» Tom Kinmonth, fixed-income strategist at ABN AMRO, said in an interview. «It is one of the few areas where we are seeing good returns,»he said.

One Portuguese analyst who declined to be named for compliance reasons said NPL deals had picked up «significantly» in 2018 and that demand was continuing in 2019 amid «growing appetite for these kind of assets

Rafael Quina, analyst at Fitch Ratings, said he expected the NPL ratio for the Portuguese banking sector to fall to about 7% by end-2020 from about 9% at the end of June, helped by NPL sales, recoveries and write-offs. In the next two to three years, the ratio will decline further to 5% to 6%, he said.

According to this specialist, Fitch is expecting some improvement in terms of asset quality, but a gradual slowdown in the pace of improvement compared to 2018 and 2019, which were years of «quite significant» progress, he said. The potential for large deals on the Portuguese market is limited, with most lenders selling off small to medium sized portfolios to foreign funds, he said.

In addition, banks are not keen on selling their bad residential mortgages to distressed debt investors because of reputational or litigation risk, limiting the amount of loans they can sell, he said.

Economic growth remains strong in Portugal, despite concerns of a slowdown in eurozone economies, and that should help support NPL sales going forward, analysts said. The Portuguese central bank expects the economy to grow by 1.7% in 2020, down from a projected 2% in 2019 and 2.4% in 2018.

«That is still pretty good on a European basis,» ABN AMRO’s Kinmonth said. «The banks have been restructured very well, lending is still deleveraging … and even just a benign year would be pretty positive for NPL development,» he said.

Portuguese companies are managing their debt positions in a more conservative way than in the past, the legal process for recovering loans has improved, and regulators are pushing for NPL declines, factors which should support Portuguese banks in reducing NPLs, Quina said.

Original Story: S&P Global Market Intelligence |  Jennifer Laidlaw and Mohammad Taqui 
Photo: Photo by Alfonso Romero for
Edition: Prime Yield

Spanish banks speed up the sales of bad credit in the end of the year

Spain’s Banks have speed up the sales process of their nonperforming loans (NPL) portfolios in the end of the year. The regulatory watchdogs are increasing the pressure towards an NPL ratio reduction among the country’s banking system.

Since the end of 2019 and up to the beginning of the new year, Spanish banks have sold – or are about to sell – more than €8 billion in NPL. The big news in relation to the last few years is that now these big portfolios aren’t just comprising mortgages only, but also consumer loans without collateral (unsecured) granted to companies and households.

In fact, these days there is more value “unsecured” than “secured” among the latest portfolios sold. Its presence is increasingly bigger in the portfolios, and is no coincidence that the nonperforming rate in the consumer credit is already surpassing the 5% of the general ratio, and in volume, has already reached €5 billion in overdue loans with a double digit annual growth.

The largest porftolios recently sold are those from BBVA, totalling €5 billion in toxic debt of which half correspond to unsecured loans – the largest portfolio with these features to be ever sold in the Spanish market. In specific, the bank sold its Project June, woth more than 300,000 upaid loan contracts, to opportunistic Swedish fund Intrum. On the other hand, in the end of 2019  the bank also sold its €2.5 billion Project Hera, made up largely of loans to SMEs, to Cabot and Carval.

Caixa Bank, for its hand, completed the sale of the €865 million Astún portfolio, comprising unpaid credits to households and corporates. Intrum was the buyer, along with 50% of the Vento portfolio, sold by Banco Sabadell.

Original Story: El Confidencial | Óscar Jimenez
Photo: Photo by Victor Iglesias from FreeImages
Edition: Prime Yield

PQH sells €1bn impaired loans portfolio to Intrum Hellas

PQH, the liquidator for bad banks in Greece, has signed a deal to sell a €1 Bn portfolio of unsecured impaired loans to loan servicer Intrum Hellas. The deal was agreed at a price of €71.1 Mn, meaning PQH will receive 7% of the outstanding principal.

The portfolio comprises unsecured retail and small business soured loans. Morgan Stanley advised PQH on the deal.

Intrum Hellas was created last month as a joint venture of Greek lender Piraeus Bank and Swedish loan servicer Intrum. It is the biggest independent servicer of non-performing loans and real estate assets in the Greek market, managing Piraeus Bank’s €26 Bn of non-performing exposures (NPEs), while Greece’s other 18 licensed credit servicers were handling a total of €17.5 Bn of non-performing loans as of June 2019.

Original Story: Ekathimerini | Author: News 
Photo: Intrum site
Edition: Prime Yield

CarVal and Cabot buy BBVA’s second largest written-off loans portfolio (€2,5 bn)

Following the sale of “Project Juno”, BBVA signed the transfer of a portfolio comprised of written-off loans to small and medium sized enterprises (SMEs) to Cabot and funds managed by CarVal Investors. Named “Project Hera”, this was the banks second largest written-off loans portfolio, with an approximate gross value of €2.1 Bn.

Just a few days before announcing this deal, BBVA had announced another sale of a portfolio of written-off loans (known as “Project Juno”). In this case, the portfolio consisted of loans to consumers with a gross value of €2.5 Bn. The operation was BBVA’s largest sale of a portfolio of written-off loans so far. 

Over the past two years, BBVA has carried out several operations involving the sale of loan portfolios – mostly loans to developers and mortgages. Among them, the sale announced in December 2018 stands out. It was a portfolio of loans (known as (“Ánfora”) with an approximate gross value of €1.2 billion, primarily consisting of mortgages (both doubtful and bad loans). In addition, in June 2018, the bank sold a portfolio of loans to developers with a gross value of €1 billion, called “Sintra”; and in July 2017 it sold another portfolio of loans to developers with a gross value of around €600 million, known as “Jaipur”. 

In November 2017, BBVA announced the transfer of its real estate business in Spain to Cerberus Capital Management, L.P., an operation that was completed in October 2018.

Original Story: El Confidencial | J. Zuloaga
Photo: BBVA
Edition: Prime Yield

Sareb is €34 Bn property hangover, says Bloomberg

Spanish bad bank Sareb’s – whose €34 Bn portfolio of non-performing real estate assets is Europe’s largest, according to investment banking consultancy Evercore -, record of selling assets has been far from stellar.

According to Bloomberg, investors are finding out that a complicated operational structure and conflicting shareholder interests make buying assets from Sareb difficult. Its chief, Jaime Echegoyen, concedes Sareb’s record isn’t exemplary.

«We try to guarantee that the investor clients receive the service they deserve in each one but it’s possible it’s not always like that,» he said in an interview in Madrid.

With Spain’s real estate market losing some steam after half a decade of growth, doubts are mounting about Sareb’s ability to meet its original mission — to pay back by 2027 the more than €50 Bn in capital and debt injected into it by the state and banks.

The bad bank said this week that it’s shaking up its management structure. It plans to appoint a chief executive officer to take over business responsibilities so Echegoyen can focus on corporate issues.

Sareb was created in 2012 when Spain was in the throes of a financial crisis after its real estate market bubble burst. About half way through its 15-year lifespan, it has sold only about a third of the net €51 Bn of defaulted loans and real estate assets it bought at a discount from troubled banks. With the reduction of bad loans tailing off since 2017 and with investors picking off the jewels, Sareb is sitting on more and more unattractive assets.

The entity may have to accept lower returns if it wants to wind-up the operation as planned by 2027, said Elena Iparraguirre, director of financial services ratings at S&P Global Ratings.

Creating Sareb was a condition of Europe’s bailout of Spain’s banks. It allowed lenders that took state aid, such as Bankia SA, to jettison soured assets. With mounting public anger about the bailout, the government persuaded banks such as Santander and CaixaBank SA to buy a 55% stake in Sareb. The government controls the rest.

But Sareb was dealt a difficult hand. It was given no time to build a team, so it relied on structures banks already had in place. Four bank-owned servicer companies divided up and marketed portfolios assigned to them, with commissions depending on the prices they secured.

The servicers were later sold to global investment funds. 

Sareb’s objectives often diverge from those of the servicers. Both need to sell but Sareb can accept losses while the servicers driven by commissions are often unwilling to settle for lower prices.

Many of the assets Sareb took over from banks were grossly overvalued, according to a person with knowledge of the process. In some cases, holes were dug and foundations laid on properties to bump up their categorization and reduce the discount banks had to give Sareb, the person said. Sareb’s team of about 60 people had just a few months to put a price on more than 200,000 assets, with little time for on-site visits.

Sareb also has a conflicting relationship with its shareholding banks. While Sareb mainly reduces its stock one asset at a time, Spain’s banks, buoyed by the country’s economic recovery, sold their portfolios in huge packets at large discounts to funds. In the first half of this year, Spanish banks and funds sold €4.5 Bn of bad loans compared with €388 Mn in process for Sareb, according to data compiled by Evercore.

Yet when Goldman Sachs proposed to Sareb selling off a large portfolio, the idea was voted down by the board, comprised largely of bank representatives worried about flooding the market, people familiar with the operation said. Echegoyen says the deal failed because Sareb couldn’t offer the kind of discount such a large package would demand.

Sareb is trying to address some of its structural issues. It wants to renegotiate its relationship with the servicers to lower fees and take back control of some of the maintenance and legal activities. The bank has opened up the bidding process to other companies to drive competition.

Whatever Sareb’s record, one thing is incontrovertible, said Echegoyen. «We have saved the Spanish financial system,» he said. «It doesn’t mean Sareb was the white knight but we were part of a white knight – perhaps the shield or the lance or the horse

Original Story: Bloomberg | News 
Photo: Sareb (Linked IN)
Edition: Prime Yield

Value of loans serviced by domestic CSF incread in Q3 2019

The nominal value of loans serviced by domestic Credit Servicing Funds (CSF) increased in the third quarter of 2019, according to Bank of Greece’s official data.

In particular, the total value of loans serviced by CSFs increased by €1,967 Mn euros in the third quarter of 2019 and stood at €20,105 Mn, from €18,138 Mn in the second quarter of 2019.

The nominal value of serviced corporate loans increased to €5,408 Mn in the third quarter of 2019, from €5,367 Mn in the previous quarter. In further detail, the nominal value of loans to non-financial corporations (NFCs) increased by €41 Mn to €5,361 Mn at the end of the third quarter of 2019. Out of the total loans to NFCs, an amount of €3,719 Mn corresponds to loans to small and medium-sized enterprises (SMEs).

The nominal value of loans to insurance corporations and other financial intermediaries, serviced by CSFs, remained unchanged from the previous quarter, at €47 Mn.

The nominal value of loans to sole proprietors and unincorporated partnerships, serviced by the CSFs, decreased by €9 Mn from the previous quarter and stood at €2,256 Mn at the end of the third quarter of 2019.

The nominal value of loans to individuals and private non-profit institutions, serviced by the CSFs, increased by €1,936 Mn to €12,441 Mn at the end of the third quarter of 2019. In further detail, the serviced consumer loans decreased by €9 Mn to €10,105 Mn at the end of the third quarter of 2019, while the corresponding housing loans increased by €1,956 Mn to €2,329 Mn.

Original Story: The National Herald | Ana 
Photo: Bank of Greece
Edition: Prime Yield

Bad debt reduction is still a key priority for Portuguese banks

The Canadian rating agency DBRS said in a note that the reduction of nonperforming loans (NPL)  and non-essential assets will continue to be a key priority for Portuguese banks, also warning about the quality of assets.

The Canadian rating agency attributes its position to asset quality ratios of the sector, which remain weaker compared to the European average.

Still, DBRS points to greater progress in asset quality in the first nine months of 2019 in Portuguese banking, with all banks reporting lower NPL ratios.

«Supported by a combination of sales, write-offs and recoveries, the combined stock of gross NPL, excluding off-balance sheet exposures, fell by around €9 Bn to €19 Bn in the first nine months of 2019, corresponding to a 32% year-on-year reduction,»  the agency said.

DBRS also noted that the gross ratio of non-performing loans fell to around 8% in the first nine months of 2019, which compares with 12% in the same period of 2018.

Original Story: The Portugal News | News 
Photo: Photo by Pierre Amerlynck on
: Prime Yield

National Bank of Greece sells shipping NPL portfolio Worthing €262 Mn

National Bank of Greece has reached an agreement to sell a portfolio of non-performing (NPL) shipping loans with an aggregate face value of €262Mn to investment funds advised by Cross Ocean Partners. 

In a note, the lender explained «the transaction is being implemented in the context of NBG’s NPE reduction strategy». In the same statement is said that the sales price is about 50% of the portfolio’s worth on the balance sheet and would have a «marginal» impact on the bank’s capital.

A source with knowledge of the transaction told Lloyd’s List that the agreed portfolio comprises about a dozen individual loans including some coastal ferry lending, but the majority relate to oceangoimng dry bulk and tanlker business, the source said.

Servicing of the loans is expected to be assigned to QQuant Master Servicer, which is licenced by the Bank of Greece as an independent specialist in servicing of non-performing Greek debt.

Recent research put the bank among the top 10 lenders to the Greek shipping industry.

Cross Ocean Partners, led by ex-Bank of America Merrill Lynch managers Graham Goldsmith and Steve Zander, was set up in 2015 with backing from US-based private equity firm Stone Point Capital. 

Nat West Markets acted as financial advisor on the sale while NBG retained Watson Farley & Williams as legal counsel.

Original Story: Loyds List | Nigel Lowry 
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

NPL sales will continue to attract investors to Portugal in 2020

The investors’ interest in the Portuguese NPL (nonperforming loans) market will remain high, within a more professionalised context with greater maturity and improvement in the banks’ NPL ratios

This was the main conclusion at the conference “NPL Iberia – An international meeting of the iberian distressed debt market”, recently organized by Smith Novak in Madrid.

During the panel «Focus on Portugal», José Araújo, Real Estate Director at Millennium bcp, highlighted that the Portuguese market will keep attracting the investors’ interest since «there are still many and good opportunities for different segments and types of buildings», specifying «terrains in the suburbs for the middle class, warehouses for logistics or terrains for new services and offices».

Concerning the appearance of new portfolios, José Araújo believes that «considering the national banks high ratios (8.9% in June 2019, according to data from Deloitte), and their need to follow through with plans agreed upon with the authorities, it is certain that new more granular, smaller portfolios with less housing assets will appear».

Volkert Schmidt, Novo Banco RE’s CEO, stated that «this event showed once again the good moment the NPL and REO Iberian markets are going through. It was an opportunity for the sector’s main players (banks and investors), who will reinforce their presence in Portugal next year, to discuss – 2020 will once again be a good year which will help improve the banks’ NPL ratios».

The CEO notes that «there are currently increasingly less opportunistic investments, which shows that the sector is entering a period of greater maturity, which allows sellers to minimize their losses and buyers to maintain their returns».

Hugo Santos Ferreira, executive vice-president at APPII, stated that «the investors’ great appetite for this market remains. The banks’ ratio has been dropping with the sale of these assets and the banks continue their divestment work». The market is now showing more professionalism, which is positive and alongside the real estate market’s financialization, «has helped the big NPL portfolios to be placed on the market next to international investors in an easier fashion».

«The great challenges are well identified», says Hugo Santos Ferreira, naming municipal licensing or the «lack of a rental market» which, if it were more solid and dynamic, «would provide more confidence and would help the placement of many assets».

One of the issues highlighted during this discussion was the appearance of new NPL portfolios’ selling tools, which expedite the processes. Volkert Schmidt highlighted that «the development shown by service providers, in particular in terms of IT infrastructures and process improvement, allows for investors to be more precise and effective in their businesses. This allows them to increase the portfolios’ prices and minimise the credit institutions’ losses».

Original Story: Iberian Property | Ana Tavares
Photo: Iberian Property
Edition: Prime Yield 

Arrow Global raises €630 million for a pan-European NPL fund

Debt purchaser Arrow Global has announced a fundraising round that amassed nearly €630m from investors for an inaugural pan-European NPL fund.

Arrow Credit Opportunities SCSp and related entities raised €628.5m of third-party commitments into an eight-year, closed-end fund structure, drawing from global investors in diverse geographies and sectors. Combined with Arrow’s own commitments, the fund will draw on €838m in total and the group is targeting €1.5bn of third-party investments before the end of 2020.

 The transformational venture will provide additional asset management and servicing (AMS) revenue, along with fund management fee income, to the group.

 Arrow said that raising the fund is a major achievement in the development of its fund management capabilities and is central to the group’s strategy to accelerate towards a more capital-light model.

 Lee Rochford, group chief executive of Arrow Global, said: «This shows we are successfully executing our strategy to transform the business through the build-out of our fund management capabilities».

 «This represents the completion of a significant initial stage of this strategy and part of our continued drive to engage with capital partners and grow assets under management. I have been impressed with the speed of execution of this fund raising

Original Story: Credit Strategy | Marcel Legouais
Photo: Arrow Global site
Edition: Prime Yield

EU’s NPL stockpile halved since 2015, but remains hefty in Greece and Cyprus

The stockpile of Nonperforming Loans (NPL) in the European Union has halved since 2015, but, and even though all the progresses, remains hefty at lenders in Greece and Cyprus, according to the latest data released by the bloc’s banking watchdog.

The volume of NPLs across EU banks has fallen from €1.15 trillion in June 2015, when they were 6% of total loans, to €636 billion or 3% by June 2019, according to the European Banking Authority (EBA). It looked at a sample of 150 banks that account for over 80% of the sector’s total assets.

The overall drop was due to regulatory intervention, «political determination» to tackle the problem properly, and the boost from economic growth and low interest rates, EBA said.

While the average level of NPLs for the bloc has halved, some countries remain at a high level as they try to tackle a stubborn legacy of NPL stockpiles.

Greece’s NPL ratio was 39.2% in June this year, with Cyprus at 21.5%. Five other countries were above 5%, Portugal included. In 2015, 10 EU countries reported double digit NPL ratios.

Italy recorded the biggest drop, down €145 billion in over the four years, followed by €81 billion in Spain, €60 billion in Britain, and €43 billion in Germany.

Poor loans now account for nearly 8% of Italian loans, down from nearly 17% in June 2015.

«There are significant ongoing initiatives that aim to further boost the reduction of legacy assets both at European level and in specific countries,» the EBA statement said.

As the economy weakens, banks should closely monitor the quality of assets on their books to actively manage their NPLs, it added. 

Original Story: Reuters | Huw Jones
Photo: / Jonte Remos
Edition: Prime Yield

NPL sales using securitization should become easier, EBA says

Until recently, it has been difficult for European banks to sell their non-performing loans (NPL) using securitizations, and rules should be put in place to make the process more attractive, according to the European Banking Authority (EBA).

Under current rules, potential buyers of bundles loans face «very high capital requirements» for owning the assets, the EU’s banking watchdog said in opinion sent to other policy makers. On top of that, new regulations governing asset-backed securities are causing «compliance challenges» for bad-debt sellers.

The issues result in «higher funding and transaction costs, depress the price of assets, increase the originating institution’s losses and make securitizations an unattractive funding tool», the bloc’s top banking regulator said.

Over the last years, Europe’s banks have faced pressure form EU regulators to reduce their piles of non-performing loans. The total stock fell to €636 billion at the end of June from more than one trillion euros in 2016, according to the EBA. But levels remain elevated in some member states, including Greece, Cyprus, Portugal and Italy.

Until now, lenders have several options when it comes to getting rid of soured assets. They can keep them and absorb the loss, package and offer them at a discount or securitize them, where loans are bundled and sold in tranches with different levels of risk. While the latter is the most costly and complex kind of transaction, it can appeal to a broad range of investors, leading to better prices for sellers, the EBA said.

Recently, Italy and Greece have launched programs with government guarantees to promote the market for securitizations of non-performing loans (NPL). UniCredit SpA is currently preparing to sell €6.06 billion of soured debt through a securitization. Yet. Overall, the method «remains small compared to outright portfolio sales», the EBA said.

However, any rule changes are unlikely to come quickly, as they would need action from the European Commission and may elicit further debate in the block’s parliament and in national governments.

Original Story: Asset Securitization report |Bloomberg News
Photo: Szymon
Edition: Prime Yield

Europe’s financial system remains fragile and fragmented

The European financial system remains fragile and fragmented due to the close relationship between sovereigns and banks, European Central Bank policymaker and Governor of the Bank of Spain Pablo Hernandez de Cos said.

«Investment portfolios are not well diversified and investment opportunities are lost as these may not always be matched with savers’ funds. The financial system remains fragile and fragmented because of the doom-loop between sovereigns and banks,» de Cos said during a conference in London.

The EU still lacks the necessary fiscal tools to cushion against asymmetric or large systemic shocks in the euro are, he said.

De Cos also noted that it was essential for policy makers to strengthen European regulators. «As European markets become more integrated and technologically complex, this is becoming a more essential element that policy-makers need to address,» he said.

Original Story:Reuters | Marc Jones 
Photo: Szymon
Edition:Prime Yield

ING puts PwC in charge of selling a €100 million NPL portfolio

The Spanish subsidiary of the Dutch group has put for sale a NPL portfolio, having PwC as advisor. Named “Project Silex”, the portfolio has gross nominal value of €100 million.

Including consumer and SME credits, even though some of the loans have collaterals, most of them are unsecured NPL, according to sources close to the operation.

This one more unsecured NPL portfolio to be put for sale over the last few months.

International funds specialized in the market have entered in Spain over the last few years, attracted by the growing in consumer credit at a pace of 20%. The country’s National Bank has already warned that «the accelerated growth in consumer credit could lead to higher increases in non-performance». According to Spain’s Central Bank latest figures, the NPL ratio stood at 3.2% last year for credit of durable goods and at 7% in the case of credit for the acquisition of other goods and services.

Original Story: El Confidencial | Oscar Gimenez
Photo:ING Site
Edition and Translation:Prime Yield