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

Rio de Janeiro

Bank lending rises 0,4% and loan defaults down 0,1% in June

The amount of outstanding loans in Brazil rose 0.4% in June from the previous month at 3.296 trillion reais ($873 billion), representing some 47.2% of gross domestic product, the central bank said on Friday.

Loan defaults edged down to 3.8% from 3.9% in May, while lending spreads widened to 31.5 percentage points from 31.1 percentage points the month before.

In the first half of the year, the total stock of outstanding loans in Brazil rose 1.2%, the central bank said.

Original Story:Reuters | Marcela Ayres and Jamie McGeever
Photo: Bruno Leiva for FreeImages
Edition:Prime Yield

Second home sales jump by 54% in Greek islands

Holiday home transactions on selected islands of the Cyclades recorded a 54% annual increase in the first half of the year, according to an analysis of data from the Property Transaction Value Register of the Finance Ministry’s General Secretariat of Information Systems.

The majority of buyers originated from other countries and that some of sought not only to acquire a holiday home in Greece but also to secure a residence permit for non-European Union citizens (Golden Visa).

Bank of Greece data for the first quarter of the year show a 130% year-on-year growth rate in capital inflows from abroad for the acquisition of properties.

Original Story:Ekathimerini | Nikos Roussanoglou
Photo: Toomas Järvet for FreeImages
Edition:Prime Yield

Lone Star completes the acquisition of a €2.7 billion REO portfolio from Bankia

US private equity fund Lone Star is now the official owner of a portfolio of real estate assets (REO) and non-performing loans (NPL) with a gross value of € 2,703 million purchased from the Spanish bank Bankia.

According to a note sent to Spanish Securities Commission (CNVM), the correspondent value from the real estate total €1,420 million while the NPL has a gross value of €1,283 million.

This operation is restricted to the assets owned by the two societies established by Lone Star and Bankia back in December 2018 to together manage and develop a portfolio of real estate and bad loans that was then valued in €3,070 million.

The difference between the final value of the sale and the initial value– of €367 million – is due to the «the organic recovery and the day-to-day management of the assets that had have been taken since the signature of the agreement until now», explains the banking entity.

Original Story:Eje Prime | News |
Photo: Bankia site
Translation and Edition:Prime Yield

Caixabank and Sabadell cut income forecasts

Spanish banks Caixabank and Banco Sabadell cut their income forecasts for 2019 because interest rates were expected to be lower for longer than expected in the euro zone.

Caixabank, the country’s third-largest lender in terms of assets, reduced its guidance for core revenue to a growth of around 1% in 2019 from the 3% expected previously.

Sabadell, the fourth-largest lender, revised its net interest income (NII) guidance to between 0% and -1% in 2019. It had previously forecast a NII growth of 1% to 2% for 2019.

In a precursor to a rate cut, the European Central Bank said it saw rates at present or lower levels through mid-2020, a subtle change to its previous pledge to keep rates unchanged through next June.

Lending income at both banks remained under pressure in the second quarter and in the first half of the year.

Net interest income – a measure of earnings on loans minus deposit costs – at Caixabank rose 0.9% in the second quarter to €1.24 billion. Analysts had forecast a NII of €1.25 billion, according to a Reuters poll.

At Sabadell, NII rose 0.6% to €905 million against the same quarter last year. Analysts expected NII to come in at €909 million. In the first six months of 2019 NII edged 0.2% lower to €1.81 billion compared to the first half of last year, in line with analysts’ forecasts.

Original Story:Reuters | Jesús Aguado
Photo: CaixaBank Site
Edition: Prime Yield

Mortgage granting soared 33% in the first semester

The volume of home-buying and building loans with funds from Brazil’s system of savings and loans (SBPE) increased sharply in the first half of the year.

Mortgage financing totalled 33.7bn reais (US$9.1bn), up 33.3% year-on-year, according to real estate credit and savings association Abecip.

In the period, 129,200 homes were financed compared to 98,840 units in the first semester of 2018.

Original Story: EXAME |Juliana Elias
Photo: Bruno Neves for FreeImages
Translation & Edition:Prime Yield



  Greek banks aim to shrink their NPL pile in €54 billion by 2021

A reduction of €54 billion in bad loans is expected to be achieved by Greek banks, which they are able to do if they work hard, stressed sources of the institutions.

With regard to the tools that banks have adopted in reducing NPLs by 2021, they have a good balance as they rely on sales and securitisations. According to the same sources, a major and crucial role in reducing red loans will play the course of the macroeconomic magnitudes of the Greek economy and real estate prices.

If there is an improvement on these two fronts, banks could go beyond the targets set by the end of 2021. However, reducing the  non-performing loans (NPL) by €54 billion will bring their percentage to 19% when that the average in the eurozone is at 3.8%

With regard to the banks’ preferred solutions for reducing red loans, they should create a balance between the interests of borrowers and the maintenance of stability for the banks, without these solutions being too dependent on the “haircut”.

As far as the capital position of banks is concerned, it is in good standing and capable of dealing with non-performoing exposures (NPEs).

The two plans for reducing NPEs

The two more drastic, horizontal reduction plans for NPEs promoted by the FSF and the Bank of Greece are positive and good systemic solutions that can help banks.

With regard to the TFM project, which provides for an APS mechanism to support a larger volume of NPLs and is currently awaiting the approval of the Commission, decisions need to be taken quickly. It should be noted that in other countries, such as Ireland, Spain and Portugal, where banks faced similar problems with non-performing loans, the adoption of systemic solutions (NAMA, SAREB, contributed to their effective management, with the result that the percentage of red loans being now in a single digits).

Beyond that, the reduction in red loans and the increase in loans that are necessary to boost the profitability of the banking system are directly interdependent and go hand in hand. As long as the red loans are reduced and the macroeconomic environment continues to improve, banks will also grant new loans.

Regarding the issue of auctions, the same sources reported that they are being monitored and banks have to reduce the stock of real estate they have in their portfolios and as the prices on the real estate market improve, to get rid of the real estate from the balance sheets.

Original Story: IBNA | Giannis Agouridis
Photo: Jonte Remos for FreeImages
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

Reform progress paves way for Brazil rates to hit a new low

Expectations that Brazil’s central bank will soon embark on an aggressive interest rate-cutting cycle gathered momentum, after a measure of annual inflation fell to its lowest in over a year in mid July.

Economists at Bank of America Merrill Lynch slashed their end-year forecast for the benchmark Selic rate to 4.75%, Goldman Sachs said the easing cycle will start now, and Capital Economics said the mid-month inflation print for July «surely seals the deal» on a rate cut very soon.

The IPCA measure of mid-month inflation fell to 3.27% in July from 3.84% in June, lower than economists had expected and the lowest since May last year.

Economists at BAML, already among the most dovish on Brazil’s rate outlook, now expect the Selic rate to be cut to a new low of 4.75% this year compared with their previous call of 5.50%, starting with a 50 basis point reduction by the mid of July.

In a note to clients, they said a global shift towards a more dovish policy stance among central banks, concrete progress on Brazilian pension reform approval, structurally weak inflation and disappointing growth all point to substantially lower rates.

They also lowered their 2019 economic growth forecast to 0.7% from 1.2% and next year’s projection to 1.9% from 2.2%.

The Selic has been held at a record low of 6.50% for well over a year, but possibly not for much longer.

«We believe Copom will initiate a moderate easing cycle at the July 31 meeting. We expect 100 bps of rate cuts before the end of the year,» said Alberto Ramos, head of Latin American research at Goldman Sachs in New York.

Interest rate futures markets are pricing in around 100 basis points of easing over the next year.

On July 23rd, the International Monetary Fund slashed its outlook for Brazil’s gross domestic product growth this year to 0.8% from 2.1%, in line with the government, central bank and market consensus.

Original Story:Reuters | Jamie McGeever
Photo: São Paulo /Brazil
Edition: Prime Yield

Greece’s banks plans’ to shrink NPE pile considered to be «ambitious»

Plans by Greek banks to reduce their load of sour loans by €54 billion by the end of 2021 are «ambitious», a source familiar with the situation in the country’s banking sector said.

«They must work hard to achieve it,» the source said to Reuters.

Bad loans or so-called non-performing exposures (NPEs) are the biggest challenge facing Greek lenders, the legacy of a multi-year debt crisis that shrank the economy by a quarter and drove unemployment to a high of nearly 28% in 2013.

Banks have made progress in reducing the pile and repairing balance sheets, but the pace needs to speed up to enable them to finance the recovering economy.

At the end of the first quarter, Greek banks were still saddled with €80 billion of NPEs, meaning their ratio of sour credit over total loans was 45.2%. They aim to bring the ratio down to below 20% by the end of 2021.

«Banks need to work hard to achieve this target and try to overachieve it, if they can,» the source said. «It is crucial for the recovery in their lending ability and profitability

The target of bad loan reduction is the maximum amount feasible given banks’ current levels of capital, the source said, and it will be a significant achievement if they meet it.

But even if the hoped-for €54 billion reduction is attained, Greek banks will still be far away from peers in the euro zone, where the average NPE ratio stood around 3.8% at the end of the first quarter, the source said.

«If bank balance sheets remain clogged with non-performing assets, this impairs their ability to finance new initiatives in the economy,» the source said.

Greek authorities, seeking to help banks to clean up their loan books faster, have put together new schemes to help lenders offload bad debt by wrapping it into asset-backed securities.

«These initiatives are very important to reach the desired (bad loan) levels,» the source said.

Original Story:Reuters |George Georgiopoulos
Photo: Markellos P. from FreeImages
Edition:Prime Yield

Credit Suisse expands Spain’s private banking unit

Credit Suisse International Wealth Management, the private banking division of the Swiss firm, has bolstered its business in Spain with the appointment of four private bankers.

The quartet of bankers will be based in the firm’s office in Madrid focusing on high net worth individual clients.

Paloma Gómez de la Higuera joins the Swiss firm as a senior private banker from Popular Banca Privada. With around 22 years’ experience in the industry, she previously worked at entities including Bankinter and Bestinver.

Jaime Beruete Concostrina, also appointed as a senior private banker, comes from the London office of Fisher Investment. He brings to the role 12 years’ experience in the sector, mostly gathered at the private banking and portfolio management areas of companies like JP Morgan and Jefferies International.

Patricia Fitzgerald joins the Spanish team of Credit Suisse in Madrid from the group’s New York office, where she was responsible for emerging markets fixed income and structured loan products. She started her financial career at Citi.

Carlos Núñez Alfaro, the fourth addition to the team, joins from Atl Capital and brings experience in private banking and M&A analysis.

Original Story: Investment Europe | Eugenia Jimenéz
Photo: Crédit Suisse site
Edition:Prime Yield