NPL&REO News

Portuguese lenders granted €10.63 Bn in new housing loans

In 2019 the Portuguese banks granted a total €10.63 billion in new housing loans, recording an 8.1% year-on-year growth, and corresponding to the maximum of the decade.

Commenting on the data released by the country’s central bank (BoP), the Association of Construction and Public Works Industries (AICCOPN), stressed that is necessary «to go back to 2008 to find a year with a greater volume of credit granted».

By the end of 2019, the total stock of mortgage credit within the Portuguese banks amounted €93.290 billion, showing a slight increase of 0.3% year-on-year.

In December, the average value of housing for bank valuation purposes was 1,321 €/sqm, an increase of 8.3% compared with the 1,220 €/sqm in the last month of 2018.

As for the of credit granted to construction and real estate companies, however, there was an annual reduction of 6.6%, with the new contracts totalling €16 billion in 2019. 

Original Story: Eco News | Lusa 
Photo: Photo by Svilen Milev for FreeImages.com
Edition: Prime Yield

Spain’s Abanca to buy Portuguese EuroBic bank

Spanish lender Abanca informed it has agreed to buy 95% of the shares in Portugal’s EuroBic, in which Angolan billionaire Isabel dos Santos has been trying to sell a 42.5% stake, in a bid to boost revenues.

This is Abanca’s fifth acquisition since 2014 and its second in Portugal, and is conditional on the completion of due diligence, Abanca said in a statetement. Portugal’s central bank (BoP) had been informed of the deal, which now needs approval from both the European Central Bank and Bop. The price of the deal wasn’s disclosed. 

«We are betting on the Iberian Peninsula», Abanca Chairman Juan Carlos Escotet said in a statement sent by the lender. «This (deal)… allow us to significantly increase our business volumes by more than €11 billion».

By the end of December, EuroBic managed around €5.2 billion in credit as well as €6.15 billion in deposits, according to data provided by Abanca.

Beside Isabel dos Santos’ stake, the acquisition also includes a 37.5% stake in EuroBic belonging to Fernando Teles, the former chairman of Banco BIC Português, as the lender was previously known.

EuroBic has non-performing loan (NPL) ratio of 6.4%, below the average across Portuguese banks last year of 8.3%, and employs 1,482 people and has 184 branches.

Original Story: Reuters |Jesús Aguado and Catarina Demony
Photo: Site EuroBic
Edition: Prime Yield

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

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

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 FreeImages.com
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 FreeImages.com
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 

State can be called to inject almost €700 million in Novo Banco, again

Portugal’s Novo Banco, the ‘good bank’ created out of extinct BES toxicity has failed to fly, or even hobble.

The bank has just presented its results for the nine-month until September and the figures were worse than the expected.

«Consolidated results have worsened in a substantial way», writes Diário de Notícias – outlining ‘an accumulated loss of €572.3 million to the end of September. That’s 46% more than losses for the same period last year.

The government «had expected to inject €600 million euros into the bank (via the Resolution Fund) in 2020, due to the losses the bank reported this year, DN adds – but «in the end Novo Banco’s financial situation is worse than it seemed. Again».

The European Commission «estimates that the State will be called to inject €653 million, minimum, next year because of failings to balance capital ratios. (Finance minister) Mário Centeno forecast €600 million», the paper explains.

Grupo Novo Banco hasn’t specified exactly how much money it will request from the Resolution Fund – which DN stresses «is the property of Portuguese banks but doesn’t have the resources necessary to keep injecting this level of funds, so has to borrow from the State».

The country will have to wait for the results of the last three months of 2019 before Novo Banco formulates its «request».

As was explained when the bank was ‘sold’ to US equity fund Lone Star in 2017, Portuguese taxpayers are tied to helping recapitalise the bank to the tune of a maximum of €3.89 billion euros.

The figure was always touted as «the worst case scenario». But fast-forwarding to 2019 shows the financial situation «just continues to worsen», says DN.

«Just to have an idea, since 2014 – the year of BES’ implosion – to September this year, Group Novo Banco has presented cumulative losses in the order of €6.55 billion».

Whatever happens in the future, says the paper, «the negative consequences for the public purse are already substantial».

Original Story: Portugal Resident | Natasha Donn
Photo: Site Novo Banco
Edition: Prime Yield

Moody’s cut the Portuguese banking outlook to stable

Rating agency Moody’s cut the Portuguese banking outlook to stable from positive, warning the domestic economy will continue to weaken as euro zone growth slows, capping current low levels of profitability.

After a severe debt and economic crisis, Portuguese banks returned to profitability last year with reported net income of €1.1 billion, compared with a net loss of €88 million in 2017, Moody’s said.

However, Moody’s said banks’ profitability in recent years has been «distorted by sizable losses reported at Novo Banco», which emerged from the ruins of Banco Espírito Santo after its collapse in 2014.

Novo Banco has been 75% owned by U.S. buyout firm Lone Star since October 2017 and 25% by the Portuguese Resolution Fund. If Novo Banco’s losses are excluded, Portuguese banks’ return on assets stood at a low level of 0.7% at the end of last year and 0.8% in the first six months of 2019.

Moody’s said Portuguese banks’ capital, profitability and funding conditions were expected to «hold steady over the next 12 to 18 months» and that they were likely to «further reduce their stock of non-performing assets».

But even though Portuguese banks’ non-performing assets will continue to «fall organically», their «stock of problematic assets» will remain high, Moody’s said.

«Profitability will likely remain close to current low levels, with lower provisioning expenses and cost reduction initiatives broadly offsetting subdued business volumes and very low interest rates,» said Moody’s senior analyst Maria Vinuela.

According to Moody’s, banks have improved their «loss absorption capacity» in recent years, but a large volume of deferred tax assets – those carrying losses from previous years that may be used to reduce later taxable income – undermines their capital strength.


Original Story:
 Euronews | Catarina Demony
Photo: FreeImages.com / Armindo Caetano
Edition: Prime Yield

Millennium bcp post best nine-month results in 12 years

Portuguese lender Millennium bcp reported a 5% rise in nine-month net, helped by record client numbers and a sharp drop in non-performing assets. 

Millennium reduced exposure to non-performing assets and loans, which have plagued Portuguese banks since the 2010-14 financial crisis, by 27% to €4.6 billion, with impairments and provisions for bad loans dropping 11.2% to €299 million.

Its performing credit portfolio rose by 4.5%, or €1.4 billion, with strong corporate lending accounting for almost half of the growth as the country’s economy continued to strengthen.

«Despite the challenging ECB monetary policy, the truth is these are the best nine-month results we’ve had in the past 12 years» CEO Miguel Maya told a news briefing, referring to pressure from record low interest rates set by the European Central Bank.

Net profit came in at €270 million as Portugal’s biggest listed bank lifted net interest income (NII) by 9.5% year on year to €1.15 billion.

«The increase in net interest income was the fruit of growing activity with our clients,» Maya said. «The evolution prospects are positive supported by a stronger client base and normalisation of the cost of risk

Maya added that client numbers, in Portugal and abroad, rose 5% to nearly 5.1 million, supported by new technology platforms for digital and mobile customers. Those customers now account for nearly 40% of the total client base.

Millennium also operates in Poland, Angola and Mozambique.

Original Story: Reuters | Sérgio Gonçalves 
Photo: Site Millennium bcp
Edition: Prime Yield

Heating up on property prices leads to new changes on the Golden Visa regime

With property prices in «major urban centres» already showing clear signs of «overheating», the government is considering throttling back on the issuing of ‘Golden Visas’ for the purchase of houses and apartments.

Says Expresso, economy minister Pedro Siza Vieira has confirmed the executive will be «pondering new alterations of the golden visa rules to counter the excessive investment in property this programme has generated, contributing to further inflating the property market which is already overheated, particularly in large cities», like Lisbon and Porto.

Golden Visas for house and apartment purchases are unlikely to be ruled out altogether, however. One thought is that they will probably only be offered when investors are buying in the interior or areas of low population density, where the «pressure on property prices is less».

Expresso stresses that when the regime was first introduced, in 2012, Portugal’s property market was in the doldrums. The lure of fast-track residency visas has turned everything round, bringing €4.8 billion into the economy, and conceding entry into Europe to nationals from China (4,396), Brazil (829), Turkey (366), South Africa (314) and Russia (283).

But the programme has always been under-fire, for the fact that it essentially opens a door into Europe for anyone with money, with very little research taken into how they have come by it.

Says Expresso, likely changes to the Golden Visa regime could actually see the €500,000 stipulation for property purchases reduced, as long as the transactions satisfy other criteria.

This far however, this is all «on the drawing board». 

Original Story: Portugal Resident |Natasha Donn
Photo: FreeImages.com / Miguel Saavedra
Edition: Prime Yield

BPI’s earnings in Q3 fell by 52%

Portuguese BPI Bank, owned by the Spanish Caixa Bank, recorded €253.6 million profits in the first nine months of this year represents a decrease of 52% from the €529.1 million achieved in the same period of 2018.

In the presentation of the results, it can be read that «compared to the same period of 2018, the evolution of the consolidated profit (-52%) is strongly influenced by the extraordinary positive impacts registered in September 2018 (+€160 million, mainly gains on the sale of shareholdings) in the activity in Portugal which were not repeated in 2019».

BPI’s also ended the Q3 with 29 fewer workers and 14 fewer branches compared to the same period last year.However, the bank mentions that in September of this year it had «in Portugal 31 ‘premier’ centres, one mobile branch and 34 business centres, making a total of 479 commercial units». In September 2019, the BPI had 4,869 employees, while in September last year it had 4,898.

Original Story: Macau News Agency | Lusa
Photo: Facebook BPI
Edition: Prime Yield

CEMG mandated JP Morgan to arrange its 3rd public NPL securitization

Caixa Economica Montepio Geral, the bank holding company, has mandated JP Morgan to arrange its third public NPL securitization, with the Portuguese lender closing in on getting its non-performing exposures (NPE) below the 10% mark.

Gaia Finance ABS has a gross book value of €234.3 million and an unpaid principal balance of €206.6 million. The pool consists of defaulted secured and unsecured loans, with under half of the defaulted pool comprising secured loans backed by residential, commercial and industrial properties in Portugal.

Original Story: Global Capital |Tom Brown
Photo: Site CEMG
Edition: Prime Yield

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

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