Greece’s top 3 banks put more than €6Bn in NPL for sale

The intentions of investment funds active in purchasing nonperforming loans (NPL) portfolios in Greece, having placed some 1.3 billion euros in the market to date, will be tested in 2019, as Alpha Bank, National and Piraeus are planning fresh sales adding up to more than 6 billion euros.

These intentions are not only related to the nature of the portfolios up for sale and whether the loans included are secured against properties, but also to the results secured from managing the portfolios already transferred and whether expectations of the recovery of part of those household and corporate debts are met.

Talks on bringing down NPL are restricted to the reduction banks will achieve in the context of their commitments to the monitoring authorities; however, the issue is much broader.

While Greek banks’ nonperforming exposures had declined by 25.4 billion euros from their peak of 107.2 billion in March 2016 to 81.8 billion by end-2018, the reduction of the stock of bad loans does not mean that the debts are now being serviced. On the contrary, that figure concerns loans that may have changed hands but remain in the economy, as the households and corporations responsible for them have yet to reach a settlement as to their repayment. This is what will determine the success or failure of the project to slash bad loans – not just the banks’ financial reports.

Market professionals explain that despite the portfolio transfers implemented in 2018 – a year of mass sales – the secondary market has yet to reach the same pace. In spite of investors’ keen interest in buying NPL portfolios, as well as the licensing to date of 17 management companies, the results have not been reflected in the figures and investors’ returns have yet to be measured.

The same sources say the delay there is predictable, given that the market requires at least 18 months to mature. Still, the long list of management companies licensed in the short period of less that two years has exceeded all expectations.

This glut also reflects reservations expressed by the market over the price levels in portfolio sales by Greek banks, which up until today have been the main tool employed to reduce NPEs. In the first year after the sales started at end-2017, the four systemic banks of Greece made eight transactions, while Attica Bank conducted another two.

More than half of the 1.3 billion euros invested by major funds (i.e., 769 million euros) went to pay for two sizable transactions concerning loans secured against realty. They were the Amoeba and Jupiter packages conceded by Piraeus and Alpha respectively – the former fetched revenues of 432 million euros and the latter 337 million. The prices achieved in those sales correspond to 33.5% and 29% respectively of the nominal value of the portfolios (the original capital without interest) and were perceived by the market as particularly high, raising expectations concerning secured loan sales.

The next crash test for secured loan sales will be the Symbol portfolio that National Bank is selling and which mainly comprises loans issued to very small enterprises. The nominal value of the portfolio amounts to 950 million euros and the binding offers tabled a few days ago will be assessed by the end of the month. The completion of the transaction and the price secured will indicate whether the NPL transfer market is displaying fatigue or not, and represent an evaluation of the recent framework for the protection of borrowers’ primary residence.

The next packages of secured loans will be put up for sale by Alpha Bank, which is planning the transfer of two such portfolios with a combined value of 3.8 billion euros. Piraeus is set to follow, and then National.

As bank officials explain, the key parameter for all such transactions is the accounting value based on which the bank has recorded each portfolio in its books; that usually incorporates the provisions made for the portfolio, which is why it is lower than the nominal value of the package.

The package sales will also see the entry of PQH, the single special administrator of the 17 banks that have been placed in receivership since the outbreak of the financial crisis, or in some cases earlier. PQH is starting with the sale of the first package of consumer loans worth 1.1 billion euros, but the target is much more ambitious and aims at the earliest possible clearance of the entire portfolio of 9 billion euros it has under its management.

The PQH bad loans include a big chunk of corporate debts that account for 50% of the company’s portfolio, with 70% of them secured against collateral. However, it is far from certain that this portfolio will attain the prices the banks’ packages have achieved, as there can be no comparison between two sets of different offerings.

The loans under PQH management are not just nonperforming, but have recorded very long delays, for many years, and most of the indebted enterprises are either not sustainable or do not exist at all anymore. A similar difficulty is recorded in the management of the now-defunct ATEbank’s portfolio due to its exposure to the agricultural sector, which renders collection particularly difficult.

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Piraeus site
Edition & Translation: Prime Yield

Banco Hyundai Brasil kicks off with R$ 300 million

Banco Hyundai Capital Brasil has been launched with initial capital of 300 million Brazilian reais ($76.8 million) to support customers and dealers of carmaker Hyundai Motor with financial services, Hyundai Capital said.

The consumer financing service provider unit stemmed from a joint effort by Hyundai Capital, the financial arm of Hyundai Motor Group, and Santander Brasil, a listed subsidiary of Spanish commercial banking group Santander.

Hyundai Capital and Santander Brasil equally hold 50%  stakes of the Sao Paulo-based joint venture, according to Hyundai Capital. The capital was raised in two rounds in May 2018 and February this year.

This marks the first time for a Seoul-based captive financing company dedicated to automotive financing and leasing to gain a license to operate an offshore lender in a South American market.

Hyundai Motor has about 9% market share, the fifth-largest in the Brazilian automotive market as of end-2018. Hyundai Capital said it sees great potential in the Brazilian automotive industry on the back of rising demand for new cars in Brazil.

«Hyundai Capital is supporting Hyundai Motor’s sales with a localization strategy based on the expertise that the company has accumulated in the market for many years.» Yoono Hwang, global president of Hyundai Capital, said in a statement.

The announcement came two months after Hyundai and Santander received authorization to operate a joint lender by the Brazil Central Bank in February.

Prior to the launch of the lender, Hyundai Motor’s Brazilian unit has been offering captive financial support by Hyundai Financiamentos, operated by Santander Brasil. Hyundai Capital said the contracts with Financiamentos customers will be gradually updated to Banco Hyundai Capital Brasil.

Original Story: The Investor | Son Ji-hyoung
Photo: Hyundai Motors Brasil site
Edition: Prime Yield


Haya Real Estate increases its lease portfolio by more than 50%

Haya Real Estate, one of Spain’s leading companies in the management of debt and real estate assets reached record volumes with 20,838 assets in its lease portfolio in 2018, which represents an increase of more than 50% compared to the previous financial year.

At the close of 31 December 2018, Haya’s lease portfolio was valued at more than 2 billion euros and its average profitability was around 5%. The more than 20,800 assets managed under lease correspond to six large customers, which include banking entities, asset investors and insurance companies.

. In the last three years, the company has registered cumulative growth of 192% in the number of leased assets.

At the close of the previous financial year, the Haya Real Estate’s lease portfolio was made up of 78% residential assets, compared to the remaining 22% which is made up of tertiary assets, like offices or logistical warehouses. Region of Valencia (16.2%), Catalonia (12.8%), Madrid (12.0%) and Andalusia (11.3%) are concentrated the rest of the available portfolio. 57% of its portfolio is atomised.

Haya offers cover for all of the real estate cycle, from the credit management to the marketing of the property, also including the asset promotion and management. In addition, the company offers support in decision-making through its Advisory area and an alternative for the financing of projects through asset securitisation.

Original Story: EJE Prime | PR
Photo: Haya Real Estate
Edition & Translation: Prime Yield


Novo Banco puts another €500 million real estate portfolio for sale

The bank headed by Antonio Ramalho sent the sales announcement of another real estate portfolio to investors. This portfolio includes 200 assets with a gross nominal value of €500 million, and the bank’s goal is to complete the deal until the end of June.

About two thirds of the portfolio correspond to land and some industrial assets, but there are also some residential and retail properties within. A source close to the process revealed to Jornal Económico that the majority these assets are concentrated among the districts of Lisbon and Setúbal.

This portfolio, that is the second sale relative to non-performing credit, is named Project Sertorius. PwC is advising Novo Banco in the operation.

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

Cerberus raises $5.1 billion to buy NPL worldwide

Cerberus Capital Management is betting big on bad loans.

The New York-based firm, which holds equity stakes in Avon Products Inc. and Deutsche Bank AG, has raised $5.1 billion (around € 4.5 billion) to buy nonperforming loans, or NPLs, to capitalize on a growing supply of such deals in Europe and other markets.

Cerberus Global NPL Fund, L.P. (“Global NPL Fund”) initially targeted $3.5 billion in commitments and closed approximately $4.1 billion of commitments from existing and new limited partners. In addition to the Global NPL Fund, Cerberus raised over $1.0 billion of commitments in separately managed accounts (“SMAs”) for its global NPL strategy.

The global NPL opportunity represents a multi-trillion-dollar market with attractive investment opportunities that few managers are equipped to pursue. In addition to significant opportunities in Europe, Cerberus believes compelling long-term opportunities to invest in NPL portfolios exist in other parts of the world, including China, India, and Brazil.

With approximately $5.1 billion in total commitments, Cerberus expects to continue its track record as one of the largest and most experienced NPL investors in the world. Cerberus’ NPL platform is supported by its industry-leading investment team with 46 investment professionals that work in concert with Cerberus’ proprietary servicing platforms, including Cerberus European Servicing, along with Cerberus’ third-party servicing partners in local jurisdictions.

«We greatly appreciate the support from our existing limited partners, as well as our new investors, who recognize our proven track record investing in NPLs across geographies and business cycles,» commented Seth Plattus, Chairman of the Cerberus Capital Formation Committee.

Lee Millstein, President of Cerberus Global Investments and Global Head of Real Estate for Cerberus, added, «We have built an industry-leading NPL platform with the expertise, resources, and scale to partner with leading banks and provide best-in-class servicing. We are uniquely positioned to benefit from the strong NPL opportunities around the world and we look forward to continuing to be a trusted, strategic partner to financial institutions

While the firm has managed single-strategy NPL funds for SMAs and invested in NPL portfolios from its flagship multi-strategy funds, the Global NPL Fund is Cerberus’ first dedicated NPL fund. Over the past two decades, Cerberus has executed more than 215 NPL transactions across 17 countries globally, with a total transaction size in excess of $65 billion. Since 2013, Cerberus has been the leading purchaser of European NPL portfolios, investing approximately $15 billion in equity.

Original Story: The Wall Street Journal |Will Louch
Photo: Cerberus website
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

Greece has already sold 4,154 Golden Visas

Since beginning the sale of coveted “Golden Visas” that come with residency permits and European Union passports, Greece has peddled off 4,154 to wealthy foreigners while even members of the Diaspora often have to wait a year or longer for papers allowing them to live in the country.

That covered up to the end of March this year in a program where Greece – which has among the lowest eligibility limit – granted the visas to people investing at least €250,000 in property or other means.

Most of that has come in the purchase of apartments and homes for sale cheap during a nearly nine-year-long economic crisis, with many of them turned into short-term rentals like Airbnb, emptying whole neighborhoods in Athens of long-time residents and driving up rents to prohibitive limits.

The Golden Visa property purchasers don’t have to live in the units they buy and the Paris-based Organisation for Economic Co-operation and Development (OEC) said the schemes, that run in many European Union countries, are also being used by criminals to launder money and get passports allowing them to move freely around the bloc.

Visas can also be bought outright, with criticism there’s no vetting of applicants, by investing in Greek securities, such as shares of ATHEX-listed companies, Greek state bonds or with money deposited in Greek banks.

In 2018 alone, 1,399 such long-term residence permits were granted, the business newspaper Naftemporiki said in a report. Including dependents, the program numbers 11,445 people with Chinese nationals receiving 2,416 since the program began, followed by Russians and Turks.

Original Story: The National Herald 
Photo: Toomas Järvet
Edition:Prime Yield

Portuguese banks Grant €734 million in home loans

In February, Portugal’s banks lent €734 million euros for home purchases, down 1.7% from January but up 8.6% from February of 2018, according to the latest figures release by the Bank of Portugal.

They lent €2.259 billion to companies in the month, 16.7% more than in February of 2018.

Among other loans to private individuals, banks provided €365 million in consumer loans, up 8.0% from January and up 2.0% from February 2018; for other purposes they lent €163 million, up 22.6% on the month and up 9.4% on the year.

In February this year, the average interest rate for home loans granted to individuals was 1.37%, down three basis points from January’s average rate.

For consumer credit and other purposes, average rates were 7.23% and 4.06% respectively.

Finally, the average rate for new loans to companies was 2.42%, against 2.41% in January.

Original Story:The Portugal News | TPN/Lusa
Photo: Saavedra
Edition:Prime Yield

Värde Partners will manage €800 million Sareb Residential Development Portfolio

Värde Partners, a leading global alternative investment firm, today announced an agreement with SAREB – The Management Company for Assets Arising from the Banking Sector Reorganisation – to manage a portfolio of over €800 million residential development assets in Spain.

As part of the transaction, certain Värde funds will also acquire a 10% stake in the newly-formed Bank Asset Fund (FAB) that will hold the assets. These last ones will be managed and developed by Aelca, a Spanish residential developer and asset management company owned by Värde.

«We are pleased to have been selected for his mandate by Sareb following a competitive evaluation process. We believe this underscores the remarkable quality of the Aelca platform and our team in Spain», said Francisco Milone, Partner and Head of European Real Estate at Värde Partners. «We look forward to establishing a long-term partnership with Sareb and converting these assets into thousands of homes across Spain».

In January 2019, Värde-owned Via Célere acquired the land bank assets of Aelca, making Via Célere one of the largest residential developers in Spain with a gross asset value of over €2.2 billion. Aelca continues to operate as an independent residential developer and manager.

Värde Partners established its office in Spain in 2014, now operating out of Madrid, and has invested $5.5 billion in real estate assets across Europe since 2016.

Original Story:Associated Press |PR/ Värde Partners
Photo: Varde
Edition:Prime Yield

Brazil’s President proposes formal central bank autonomy

Brazil’s President Jair Bolsonaro issued a draft bill late on Thursday, April 11,  proposing to formalize the independence of the country’s central bank, a move that would align the country with other major economies where those who make monetary policy are legally protected from political interference.

Bolsonaro, who took office in January, campaigned on an orthodox economic platform and had promised to cut spending and ensure the central bank’s independence.

According to the document, the bank would be governed by a board of governors with fixed four-year mandates, with the possibility of being re-elected once. The four-year terms would not be simultaneous with the country’s presidential term, which is also four years.

Original Story: Reuters | Carolina Mandl
Photo: Site Banco Central do Brasil
Edition:Prime Yield

Eurobank kicks off the sales of two REO portfolios

Themass sale of properties by banks is getting under way with Eurobank’s initiative for the concession of two major real estate owned (REO) portfolios with a gross nominal value of €120 million, reports.

Named “Opus” and “Star”, these portfolios contain residential andcommercial assets, and their progress will be the initial test for the market of major real estate managers.

“Opus” consists of 258 commercial assets with a gross value of €88 million euros, including offices, stores, industrial properties and warehouses, among others; of which 58% located in the Attica region. The bank has opened the data rooms for the package and nonbinding bids are expected by the end of the month.

“Star” consists of 685 properties, chiefly residential but also some that are commercial. Half of those assets are located on the Greek mainland outside the areas of Attica and Thessaloniki, and bids are expected by end-April.

Against the backdrop of a stable real estate market with some signs of price recovery, Eurobank’s move represents the first attempt at the mass liquidation of assets that are not associated with loans and are in the bank’s full ownership. It remains to be seen whether the fragmented Greek real estate market can attract the interest of major investment funds that might be interested in the group utilization of those assets mainly for tourism purposes through short-term rentals, the acquisition of the Golden Visa residence permit, or for use by students.

Eurobank’s initiative forms part of local banks’ efforts to rid themselves of the massive stock of properties in their ownership, and is an indispensable part of the plans for the reduction of nonperforming exposures submitted to the European Central Bank’s Single Supervisory Mechanism (SSM) through the next three years.

Original Story:Tornos News | News
Photo: Eurobank site
Edition: Prime Yield

Almost two thirds of Portuguese NPL is in the corporate segment

«The improving economic conditions are contributing to NPL reduction» in Portugal, underlines the rating agency DBRS.

The corporate segment was the one that contributed the most for the high non-performing loans (NPL) levels recorded in the national banking systems, being responsible for almost two thirds from the total stock.

Looking into the financial landscape, the Canadian rating agency recognises that the «risks for financial stability are lowering gradually», even though it assumes that «the high levels of corporate NPL and debt are still risks for the financial stability».

Supported by data released by Portugal’s Central Bank, DBRS highlights that the NPL ratio fell 8,5 basis points in 18 months, to 9.4% in 2018, stressing out that the Portuguese business sector was the one that contributed the most for the high NPL levels recorded by the country’s banking sector, being responsible for «almost two thirds from the total NPL stock». The Portuguese corporative total NPL remain “high”, standing at 18.5%, but below the 30% recorded back in 2016.

«The improving Economic conditions is contributing to the NPL reduction» in Portugal, said the rating agency.

Besides, DBRS also recognised the exposition from the Portuguese banks to real estate «constitutes almost 40% of the total assets». However, the rating agency warned that, «a strong housing prices increase may also be a reason of concern», though the «price rise had cooled down in 2018».

Last year, the NPL ratio stood below the 10% for the first time since June 2016, at 9.4%, and going 1,9 percentage points down from the previous quarter.

Original Story: Jornal Económico | António Vasconcelos Moreira
Photo: Bank of Portugal
Edition & Translation:Prime Yield


The Council of the EU adopted a new framework for banks NPL

The Council of the European Union (EU) have just adopted a new framework for dealing with banks’ bad loans.

The new rules set capital requirements applying to banks with non-performing loans (NPLs) on their balance sheets. The aim of the reform is to ensure that banks set aside sufficient own resources when new loans become non-performing and to create appropriate incentives to avoid the accumulation of NPLs.

A bank loan is generally considered non-performing when more than 90 days pass without the borrower (a company or a physical person) paying the agreed instalments or interest or when it becomes unlikely that the borrower will reimburse it. When customers do not meet their agreed repayment arrangements, the bank must set aside more capital on the assumption that the loan will not be paid back. This increases the bank’s resilience to adverse shocks by facilitating private risk-sharing, while at the same time reducing the need for public intervention. In addition, addressing possible future NPLs is essential to strengthen the banking union. It preserves financial stability and encourages lending to create growth and jobs within the Union.

On the basis of a common definition of non-performing loans, the proposed new rules introduce a “prudential backstop”, i.e. common minimum loss coverage for the amount of money banks need to set aside to cover losses caused by future loans that turn non-performing. Different coverage requirements will apply depending on the classifications of the NPLs as “unsecured” or “secured” and whether the collateral is movable or immovable.

The regulation will enter into force on the day following its publication in the Official Journal.

Source: EU Council | Press Release
Photo: Szymon


Mortgage credit expected to rise by 30% this year

Greece’s mortgage credit market is expected to recovery along this year, after several year of very low levels of activity. The major banks forecast a 30% growth rate in the new credit concession in 2019.

This comes after a 20% rise in the demand of new mortgage last year, with banks granting €320 million to home purchase in 2018, a figure that compares with the €260 million in new mortgage credit granted in the previous year.

According to bank numbers, the average mortgage loan amounted to €70,000 euros last year, while new issues are now made on stricter terms than in the past. A necessary condition is the borrower’s participation in covering at least 25% of the cost of the property acquired. The borrower’s contribution largely dictates the interest rate level, ranging from 4% to 5.5% for the purchase of a house, while for repair loans that are not secured against the property the rate ranges between 7% to 8%..

The state subsidy program Saving at Home (Exoikonomisi Kat’ Oikon) provided a further boost to the housing loans market last year, as banks disbursed an additional €40 million through the scheme, raising the total amount of new loans in the housing sector to €360 million.

Naturally, these figures are nowhere near the past highs recorded in this market, when bank funding powered the economy. However, the return of the credit sector to funding residential property purchases is generating optimism regarding both the increase in bank activity and the strengthening of the credit sector’s interest revenues, which in recent years had been in constant decline.

This improvement comes in the context of the property market recovery during the last couple of years, which Moody’s said will continue for at least the next 12 to 18 months.

In 2018 house sale prices rose 1.5% y-o-y in Greece. This was attributed to the increased flow of foreign investment and the improving macroeconomic environments. Moody’s added that this is also positive for the valuation of Greek bonds, banks and loans secured against real estate. The rise in real estate values is also set to offer borrowers additional incentives to refinance their mortgage loans, Moody’s estimated.

Original Story:Tornos News
Photo: Remos
Edition:Prime Yield

NPL stock sank to €25 billion boosted by portfolio sales

Since its June 2016 historic peak, of €50 billion, the non-performing loans (NPL) stock fell by almost 50%. This is due not only to write-offs but also to the sales of toxic assets portfolios.

The shrinking trend towards the NPL reduction continues within the Portuguese Banks. And much of it on the “free ride” from Novo Banco, which accelerated the sales of these toxic assets over the last year.

By the end of 2018, the total volume of NPL reached €25,8 billion, showing a 30% reduction from the €37 billion recorded just one year before, according to the latest data released by Portugal’s Central Bank (BdP).

In just one year the NPL stock retreated €11 billion, helping the NPL ratio to keep its downward trend, reaching 9.4% in the end of 2018, Bdp figures show.

Original Story: Jornal de Negócios | Rita Atalaia
Photo: Caetano
Edition & Translation:Prime Yield

Bankia will sell more than €300 million in bad credit to vulture fund Blackstone

Over the next few weeks, Bankia should complete the sale to Blackstone of a non-performing developer credit portfolio with a gross value of €300 million.

According to the digital newspaper, the Spanish bank headed by José Ignacio Gorigolzarri had planned to disposal of non-performing assets spread in three different portfolios by the mid of this year, stressing out that this portfolio Bankia is now selling to Blackstone is the largest of those the bank is planning to sell over the first half of 2019 first.

The same source notes that with this acquision, the North American volture fund continues to increase its real estate portfolio in Spain. Over the last five years, Blackstone has already invested around €24,0 billion in Spain, most of which in the acquisition of mortgage credit and real estate assets, including hotels and offices complexes.

Original Story: El Boletin | E.B.
Photo: Bankia Site
Edition:Prime Yield

Households drive credit growth in Brazil

The household credit demand will pick up in Brazil over 2019, supported by a stronger labour market, low interest rates and broadly positive sentiment, Fitch says.

In a report released last April 8th, the rating agency maintains its view that credit growth in the Brazilian system will pick up over the coming quarters, in line with stronger economic activity. «Our core view remains that economic activity growth will rise modestly, driven by a cyclical rebound in consumption», says Fitch.

Latest figures show that Brazil’s total credit was up 5.5% y-o-y in February, led by a 9.0% rise in lending to individuals, well outpacing growth in the corporate sector.After a period of deleveraging, the household debt servicing ratio is at multi-year lows, at 19.8% overall in January and 17.4% when mortgages are excluded. While unemployment has risen in the first two months of 2019, the labour market is improving, adding a net 489,520 formal jobs in the year through February, of which 207,452 were added in January and February. Consumer sentiment is improving, in part reflecting optimism over the Bolsonaro administration’s ability to improve the economy, suggesting a stronger willingness to take on debt.

Regarding asset quality, «non-performing loans (NPL) in Brazil are likely to remain moderate over the coming quarters, benefiting from low interest rates and rebounding economic activity», Fitch forecasts. Until 2015, NPLs had steadily declined since 2012, when an economic slowdown – following a significant run-up in household debt levels – saw NPLs hit 4.0% of the total portfolio. This was largely due to an increase in non-performing credit from households. NPLs are beginning to fall, supported by improving economic growth and low interest rates. According to the rating agency, total NPLs came in at 2.9% in February.

Fitch forecasts real GDP growth will rise to 2.0% y-o-y in 2019, from 1.1% in 2018.

Original Story:Fitch Solutions | Fitch Solutions Press Release
Photo: Afonso Lima
Edition:Prime Yield