NPL&REO News

Earnings from Portuguese banks hit € 1.3 billion in 2019

Portugal’s banking system closed 2018 with earning totalling €1.3 billion, against losses of € 228 million in the year before, according to the European Banking Federation (EBF).

According to the data released by EFB, these results are «largely explained by the substantial reduction in impairments».

Last year there was also a significant decrease in the non-performing loans (NPL) ratio, with total NPLs to fell by €24.6 billion since the peak in June 2016. «Ambitious strategies have been implemented to reduce NPLs and remarkable progress has been achieved: the NPL ratio has decreased significantly after reaching its peak level in June 2016 (from 17.9% to 9.4%), while the NPL coverage ratio increased from 43.2% to 51.9%», says EFB.

Total outstanding loans decreased 0.6% year-on-year, which may be an indication that deleveraging is nearing its end. Considering the domestic activity, loans to non-financial corporations (NFCs) fell 4.8% to €69.6 billion. In 2018, loans to SMEs, which correspond to 80.2% of total corporate loans, decreased 5.6% year-on-year to €55.4 billion. Furthermore, SMEs’ overdue credit dropped significantly (down 35.7% year-on-year or €3.2 billion), with the corresponding ratio standing at 10.4% (versus 15.2% in 2017), mostly fuelled by the performance of micro companies. Loans to households rose by 0.5%, with loans for consumption increasing by 10.5% and loans for house purchase decreasing by 0.2%.

At the end of 2018, the Portuguese banking system comprised 150 institutions, 60 of which were banks (including 30 branches of foreign banks), 86 mutual agricultural credit banks and four savings banks. The number of bank employees stood at around 1% of the total active workforce, while the five largest banks accounted for 78% of total assets.

Original Story: EXPRESSO | Lusa
Photo: Svilen Milev from Free Images
Edition and Translation: Prime Yield

Portugal’s competition authority fines banks a total €225 million

After a long-running investigation, Portugal’s competition authority AdC announced it fined 14 banks a total of € 225 million for concerted practices of exchanging sensitive commercial information on credit products.

The fines were imposed on Portugal’s biggest bank, CGD, as well as Millennium BCP, BBVA, BIC, BPI, BES, BANIF, Barclays, Caixa de Credito Agricola, Montepio, Santander, Deutsche Bank and UCI.

«AdC is not aware of similar convictions in other member states of the European Union and (it) is therefore an unprecedented condemnation,» it said.

In a statement, AdC said that for more than a decade, between 2002 and 2013, the banks exchanged sensitive information on the supply of retail banking credit products, including mortgages, consumer and corporate loans.

According to AdC, each bank knew in detail «the characteristics of the offer of other banks, which discouraged the target banks from offering better conditions to customers by eliminating competitive pressure».

AdC said the scheme had a significant impact on customers.

«By distorting the rules of competition through unlawful coordination that allowed them (banks) to reduce the risk and uncertainty about the performance of their direct competitors, the behaviour of the banks harmed competition, directly affecting consumers,» AdC said.

The fine imposed was based on the «severity and duration of the participation in the infringement by each bank», AdC added.

Original Story: Reuters | Author: Catarina Demony and Sérgio Gonçalves
Photo: Photo by Armindo Caetano from Free Images
Edition: Prime Yield

Bad credit disposals represent losses of €106 million to Novo Banco

Portugal’s Novo Banco confirmed the sale of a non-performing loans (NPL) portfolio originally valued in €2,732 million to an international fund for €193 million. This operation represents a € 106 million loss-making in 2019 results but will have a positive impact in the bank’s capital, with its NPL ration shrinking from 20.7% to 15%.

In cause, a portfolio of NPL and related assets, including securities – real estate or shares -, among others, that were previously arranged in the so-called Nata II Project. The buyer is a society owned by the US asset management group David Kempner European Partners.

However, the dimension of the now sold portfolio ended to be smaller than the € 3 billion initially estimated, since there were excluded ten cases with a combined original value of € 309 million, for which the bank believes it can receive individual biddings with a more attractive value. The information was released by the bank in a note, where it explains that this is still the largest transaction of its kind to be completed in Portugal.

The loans now sold correspond to assets identified as high-risk and which losses could unleash further capital injections from the State. Among these assets, inherited from the extinct BES, there were credits borrowed by companies as the Ongoing or the construction group Moniz da Maia.

In a note, Novo Banco states that with such deal «another relevant step in the process of non-performing assets disposal was given, allowing the bank to accelerate its reduction».

The credits and assets sold had a nominal value of € 2,732 million and a gross book value of € 1,713 million. The difference among these figures is explained by the fact that the original values include liabilities, guarantees and writte-offs. The sale was closed by only €191 million, representing a discount of 89% from the assets’ book value, but of only 35% from the net value, meaning that the bank had already recognized significant impairment losses in these.

Original Story: Observador |  Author: Ana Suspiro 
Photo: Novo Banco site
Translation and Edition: Prime Yield

Caixa and Novo Banco’s bad debt are the toughest to recover

Portugal’s banks have around €4 billion in bad loans for sale, 75% of which from the extinct BES. In the country there are almost one hundred credit recovery companies, but only about a fifth is registered.

«To buy [non-performing credit] from CGD [Caixa Geral de Depósitos] is one thing, buying from Santander is other completely different», said to Renascença the executive director from APERC, the association that represents more than 90% of the recovered credit in the country.

The reason, he explains, «has to do with the credit’s risk analysis and its acceptance prospects». According to António Gaspar, «the acceptance of the credit risk analysis, for instance, is very much stricter in Santander than in CGD or of what it was in BES, now Novo Banco».

In practical terms, this means that, with a stricter risk analysis the probability of default is much smaller and the «existing defaults will be easily recovered than those having a larger net, on which everything fits in».

Original Story: Renascença | Author: Sandra Afonso 
Photo: Caixa Geral de Depósitos
Translation and Edition: Prime Yield

More than half of Portuguese firms don’t have bank loans

In Portugal, more than half of the firms do not have any bank relationship, reveals the country’s Central Bank (BdP).

According to an analysis taken by BdP’s team, when firms borrow from banks, they hold two bank relationships on average. The smaller firms rely on less banks than the larger ones. Large firms have on average six different bank relationships, while micro firms, that employ less than 10 employees, usually have only one bank relationship.

There is also evidence that when firms gain access to bank loans for the first time, they usually establish a single bank relationship. As time goes by and the firm expands its activity, the likelihood of establishing relationships with other banks increases.

Original Story: BdP | Author: Diana Bonfim and Sujiao Zhao 
Photo: FreeImages.com/ Matthew Bowden
Edition: Prime Yield

BCP shrinks its bad credit pile in Portugal by €1.8 billion

Over the year between June 2018 and June 2019, Millennium bcp has reduced by €1,8 billion its non-performing credit portfolio in Portugal.

The bank headed by Miguel Maya closed the first semester of this year with a non-performing exposure (NPE) portfolio of €4,1 billion in the Portuguese market, comparing to the €5,9 billion recorded in June last 2018.

On a consolidated basis, the BCP group is still sit on a non-performing stockpile of €5 billion, less €1,7 billion than one year ago. Its NPE ratio decreased to 9,1% in june, from the 13,2% recorded twelve months ago.

BCP’s profits increase by 12,7% in the first half of 2019, up to €169,8 million.

Original Story: Dinheiro Vivo | Elizabete Tavares
Photo: Millennium BCP site
Translation & Edition:Prime Yield

Novo Banco plans to halve its NPL ratio to 10% until 2020

Portugal’s Novo Banco, controlled by U.S. private equity fund Lone Star, expects to halve its non-performing loan (NPL) ratio to 10% this year or next, putting it on a par with domestic rivals, its chairman told Reuters.

The bank, which emerged from the ruins of Banco Espirito Santo after its collapse in 2014, shed €3.7 billion of bad loans between the end of 2017 and March 2019, leaving it with €6.5 billion worth and reducing its bad loan ratio from 28% to 21.8%.

Chairman Byron Haynes said an additional halving of the ratio was key to the bank’s medium-term plans as Portugal’s third-largest lender by assets needed to align itself with local peers.

«Whether that’s going to be a 2019 or 2020 event, let’s see…we need to continue to take advantage of the good market conditions that exist at this point in time,» he said.

The average NPL ratio in Portugal’s banking sector remains high compared to the euro zone average of around 4.5%.

Novo Banco, 75% owned by Lone Star since October 2017 and 25% by the Portuguese Resolution Fund, has been offloading bad loans, real estate and non-core assets under restructuring commitments agreed with Brussels.

It is currently selling a portfolio of large debtors’ NPLs with a gross book value of more than €3 billion and a real estate portfolio valued at up to 500 million.

«The level of interest has been very high…and we expect these transactions to materialise in the near future,» Haynes said, adding that he also expected the insurance market regulator to approve the €190 million sale of GNB Vida to Bankers Insurance Holdings in the third quarter.

Novo Banco posted a €93 million first-quarter loss due to its balance sheet clean-up efforts but recurring profit rose more than 3% to €85 million with the net interest income jumping 33%.

«The recurrent business is where the growth will come,» Haynes said. «The other one is about how quickly can we de-risk the balance sheet and clean up the legacy issues

Original Story: Reuters | Sérgio Gonçalves |
Photo: Novo Banco site
Edition: Prime Yield

Greece costed €770Mn in losses to Portuguese banks

Greece is one the largest debtors within the Portuguese banking system. The south European country is the so-called “client 112” from the recently published Banco de Portugal  Largest Debtors’ list, and had driven  BCP and BPI banks to report losses of €766 million, after one of the biggest debt write-offs in history granted in the aftermath of the country’s second financial bailout in 2012.

Last 16thJuly, the Bank of Portugal published the list of the major debtors to the Portuguese banks, which have asked for State support to solve their financial problems. The Central Bank did not reveal names, but it did, however, reveal numbers and the losses they provoked. Nonetheless, it was possible to reveal some identities by crossing the available data.

That was the case of the “client 112”, which was ironically the cause for BPI and BCP requesting state assistance of €1.5 billion and €3 billion, respectively.

According to the information released, client 112 caused a loss of €408 million to BPI, corresponding to 80% of the bank’s total losses. The Bank of Portugal revealed that BPI’s exposure to 112 was initially even higher (€ 480 million). But BPI was not the only one as BCP lost €358 million with Greece’s public debt, corresponding to 30% of the bank’s total losses at the time.

Original Story:Eco
Photo: Banco de Portugal
Edition: Prime Yield

Montepio Bank sells a € 321Mn NPL Portfólio with almost 13.000 loans

Portuguese bank Caixa Económica Montepio Geral (“Montepio”) has just announced the sale completion of a non-performing loan (NPL) portfolio with a gross value of €321 million to Panorama Jubilante.

In a nota sent to CMVM, the Portuguese Securities Commission, the bank informs «that on 12 July 2019, and following a competitive sale process, a public deed was signed for the sale of a non-performing loans’ portfolio, in the form of a direct sale, to Panorama Jubilante S.A., a company incorporated under the Portuguese laws and established in Portugal».

According to the bank, the gross amount sold was 321 million euros, in a portfolio that included approximately 13.000 loans.

«The completion of this operation materializes Banco Montepio’s strategy for the continuous reduction of non-performing assets», says the bank in the same document.

Original Story: RTP
Photo: Banco Montepio site
Translation & Edition:Prime Yield

JV Cerberus and FinSolutia buy €400 Mn REO portfolio from Novo Banco

Following its goals for cleansing up the NPA (Non-Performing Assets) from its balance sheets, the Portuguese bank Novo Banco has just closed the sale of a further REO (Real Estate Owned) portfolio with a gross value of €400 million. The investment fund Cerberus together with Finsolutia are the new owners.

Named “Sertorius Project”, the portfolio includes almost 200 assets, of which two thirds are non-identified lands, besides the industrial, residential and commercial properties correspondent to the other third. Most of the assets are located either in Lisbon or Setubal areas.

The bank led by António Ramalho keeps following a strict strategy of non-rentable assets’ reduction by alienating non-performing loans (NPL) and real estate portfolios as a result of the European regulators’ requirements. Over the next months, Novo Banco expects to close a deal on “Nata 2 Project”, which is a €3 Bilion NPL portfolio and the biggest ever sold in Portugal, as ECO confirmed in exclusive.

Regarding Nata 2, Bain, KKR Davidson Kempner moved on to the second phase of the tender, which is the binding offer. Bloomberg wrote that Bain would be the best-placed contender, right in front of Davidson Kempner.

Both operations need to be approved by the Resolution Fund as they must respond for the losses related to portfolio alienation. This year, the fund led by Máximo dos Santos was called to inject more 1,145M€ under the clause of contingent capital mechanism in the 2017 contract with the American Lone Star for 75% of the bank.

Original Story: Eco News
Photo: Novo Banco site
Edition:Prime Yield

Whitestar wins the management of 2 NPL portfolios sold by Montepio

Servicer Whitestar will be in charge of the management of the two non-performing loan (NPL) portfolios recently sold by Montepio Bank, totalling a gross value of €400 million.

As explained by Jornal Económico, Whitestar is a participant in both the joint-ventures that won the two recent tenders for the sale of NPL portfolios launched by the bank led by Carlos Tavares and Dulce Mota.

AXA Investment Managers was the winner of the tender launched for the sale of the “Brick” REO (Real Estate Owned) portfolio, comprising almost 1.000 properties with a gross nominal value of €100 million. Whitestar joined AXA in this operation as its Asset Management Service Provider.

Besides, the society 400 Capital Management, having Arrow/ Whitestar as servicer, won the portfolio “Atlas 2”, which had a gross nominal value of 300 million euros and almost 6.000 contracts, including secured and unsecured credit.

Original Story: Jornal Económico | Maria Teixeira Alves
Photo: Banco Montepio site
Translation & Edition:Prime Yield

There are still €25.8 billion in NPL to be cleansed from Portugal’s top banks     

Even though having sold more than €5.7 billion in non-performing loans (NPL) and other toxic assets over last year, the six largest banks operating in Portugal still have another €25.8 billion to be cleansed from their balance sheets in order to fulfil regulatory demands.

Despite having followed different strategies on reducing its NPL pile stock, Portugal, Spain and Italy are being successful in cleaning up these toxic assets from their financial system, and they seem to be well positioned to continue their NPL reduction, Moodys says.

Notwithstanding the undergoing efforts, Moody’s Senior VP Maria Cabanyes said she hopes that banks keep pursuing their goal of converging with EU average, despite the three above mentioned countries still register high NPL ratios.

In Portugal, the banking sector has been pursuing a strategy that consists of selling their toxic assets. Altogether, in 2018 the country’s six largest banks sold more than €5.7 Bn in NPL and toxic assets, driving a significant decline within the country’s NPL ratio to 11% in the end of the year.

Despite considerable progress, there are still 25.8Bn€ to be cleansed. The banks in Portugal are still urged to tackle their NPL ratio, which stands at 9.4% above the limit imposed by the European Banking Authority.

Original story: ECO |  Eco News 
Photo: Free Images.com/Ricardo Gurgel
Edition & Translation:Prime Yield

Crédito Agrícola earns €43,85 million in the 1stquarter

Portuguese banking group Caixa de Crédito Agrícola ended the first quarter of 2019 with a consolidated net result of € 43.5 million, recording a 18% y-o-y growth.

From these, € 36.6 million were generated by the banking business, while the other € 4.2 million came from the insurance business. The real estate investment vehicles, however, hit the results negatively in € -5.3 million, partly because of the participation units depreciation.

Bank deposits reached €14 billion, 10.2% more (equivalent to € 1,297 million) than in the first quarter of 2018. The gross credit portfolio reached €10 billion, recording a y-o-y growth of 6.2%.  As for the Non-Performing Loans (NPL) ratio there was a downward compared to the 13.7% recorded in the end of March 2018, standing now at 9.8%.

«The group has continued its sound and prudent management, reflected in accumulated credit impairments of € 465 million as March 2019, a figure that assures a NPL coverage ratio of 45.3%», adds Crédito Agrícola, in a statement.

Original Story: Expresso | Maria João Bourbon
Photo: Site Crédito Agrícola
Edition & Translation:Prime Yield

Novo Banco puts bad debt from Sogema and Ongoing for sale

The two largest debtors included in the Non-Performing Loans (NPL) portfolio named Natal II that Novo Banco put for sale in the beginning of March are Sogema and Ongoing, reveals Jornal Económico.

According to the newspaper, the NPL from Sogema has an indicative value of €540 million (what should include interest) while the credits from Ongoing have an indicative value of €350 million, to which must be added other €240 million in commercial paper from theholding.

These are, indeed, the largest debtors on the Nata 2 NPL portfolio. The bank has already selected three candidates to move forward the second phase of the sales tender, inviting them to present biding offers:  Bain Capital, the JV KKR-Hipoges and Davidson Kempner Capital Management.

Original Story:Jornal Económico |Maria Teixeira Alves
Photo: Novo Banco site
Translation & Edition:Prime Yield

Portugal’s banks «on right track»

The CEO of Lloyds Bank of the UK, António Horta Osório, has said that Portugal’s banking sector is «on the right track», while warning that there is still much to do.

«Portuguese banks are presenting positive results, but we should not be complacent because there is still much to recover», said Horta Osório, a former head of Santander’s operation in Portugal, speaking at a conference on exports and foreign investment at the Nova School of Business and Economics in Carcavelos, in the municipality of Cascais.

Horta Osório began his address by acknowledging the improvement in the solvency ratios of Portugal’s banks, which he noted are currently «positive» and «in line with international standards». He mentioned the importance of the capital injection into state-owned Caixa General de Depósitos (CGD) in stabilising not only the bank itself but the whole system, of which CGD represents about one quarter.

He warned, however, that the «worrying» levels of non-performing loans, which reached as high as 15% of total assets, are still higher than they should be.

«Ten percent non-performing loans is still very high», he said. «The banks mostly have positive results, but there is still a lot to do and non-performing loans can improve».

Original Story: The Portugal News |News 
Photo: FreeImages.com/Armindo Caetano
Edition & Translation:Prime Yield

Portuguese NPL stock declines by €11.1 billion in 2018

After reaching € 37 billion in 2017, Portugal’s Non Performing Loan (NPL) stock pile shrank by € 11.1 billion along 2018, standing at € 25.9 billion in December last. The corporate NPL had a significant impact for this decrease, in which the NPL stock reduction was due not only to the rebate from the asset but also to the NPL recoveries and sales.

These achievements were highlighted by Portugal’s Central Bank in its Executive Board Annual Report. The document stresses that the NPL, considered to be one of the main vulnerabilities of the Portuguese banking system, has significantly reduced over the last year.

More specifically, the NPL went down from its €50.5 billion historic peak of June 2016 to €25.9 billion in December 2018, in a sharp drop of almost 50%, lowering in €24.7 billion.

This sustained downward trend within the NPL stock allowed that by the end of 2018 the NPL ratio stood below the 10% (9.4%), comparing with the 13.3% recorded just a year before.

Original Story:Jornal Económico | Maria Teixeira Alves 
Photo: Banco de Portugal
Edition & Translation:Prime Yield

Millennium bcp reduces its NPL in €1.9 billion in a year

Millennium bcp recorded a significant reduction of its Non-Performing Exposures (NPE) over the last year, reducing its stockpile in almost -1.9% from the end of the first quarter of 2018 to same period of 2019; and of which -1.8 billion correspond to the activity in Portugal.

Highlighting the «continuous improvement of asset quality; significant NPE reduction, with improvement in credit coverage», the Portuguese banking group informed in a note that its NPE covergage by impairment improved to 55% in the first trimester (48% as at 31 March 2018) and overall coverage to 110% (104% as at 31 March 2018).

In the same document, Millennium bcp also stressed the «significant improvement the profitability» in the first three months of 2019, driven by the activity in Portugal that more than doubled the contribution of the first three months of 2018, reaching € 94.3 million. The group net profit reached €153.8 million in the quarter ended in March.

Original Story: Jornal Económico | António Vasconcelos Moreira and Maria Teixeira Alves
Photo: Millennium bcp site
Edition & Translation:Prime Yield

CGD’s net income up 85% in Q1 to €126 million

Portugal’s state-owned bank Caixa Geral de Depósitos (CGD) reported progress in terms of profitability and asset quality in the first quarter of the year, allowing to resume the payment of dividends.

CGD consolidated net income was up €58 million in the first quarter of the year, in an increase of 85% over March 2018 to €126.1 million, equivalent to return on equity (ROE) of 6.6%.

In a press note, the bank headed by Paulo Macedo also stressed the «maintenance of positive trend in quality of CGD’s assets with a CGD Group NPL (Non-Performing Loans) ratio of 7.8% and impairment and collateral coverage of 103.0%). Cost of credit risk was 0.06% in the first quarter».

As for the performing loan book, excluding public sector, the trend of was of growth in the quarter. There was 58% increase of €165 million in new residential mortgage loans over the same period 2018, informed the public bank.

Original Story:Dinheiro Vivo |Ana Sanlez and Rui Barroso
Photo: CGD site 
Edition & Translation:Prime Yield

CTT completes 321 Crédito acquisition for €100 million

Banco CTT completed the acquisition of 321 Crédito from Firmus Investimentos, for a price of €100 million. The deal was agreed in July 2018.

321 Crédito is a specialised consumer credit business focusing on the provision of credit for the purchase of used cars by individuals rough a network of circa 1,200 points of sale, and «demonstrated a strong growth in 2018 with a loan production of €177 million (+33% vs 2017), which represents a market share of circa 10% in its segment, finishing the year with a net loan book of € 360 million», informs Banco CTT in a note. Its banking product and net profit reached € 21.4 million (+31% vs 2017) and €8.1 million (+3% vs 2017), respectively.

In a note sent to capital markets regulator, Banco CTT explains that «the acquisition of 321 Crédito is part of Banco CTT’s development strategy, introducing a new line off business, creating funding synergies and optimising Banco CTT’s consolidated Balance Sheet through a significant increase in the loan book, while improving its loan-to-deposits ratio from 30% to over 70%».

Original Story: Observador |  António Cotrim / Lusa 
Photo: Banco CTT site
Edition & Translation: Prime Yield

 

Portugal’s «strong growth» helps to boost Bankinter results in Q1

Bankinter recorded a net result of €145 million during Q1 2019, in a slight increase of 1.45% in relation to the same period of 2018. Portugal’s subsidiary recorded a «strong growth», contributing with €22 million, before taxes, to the global results of the Spanish banking group, in a 16% increase.

In Spain, Bnakinter’s credit portfolio recorded a 5% increase in Q1 while the clients’ resources grew by 10%. Regarding Portugal’s branch, both the credit as the clients’ resources increased by 12%; reaching €5.6 and €4.3 billion, respectively.

Original Story: ECO | Lusa 
Photo:Bankinter online
Edition & Translation:Prime Yield

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