Piraeus Bank rewards borrowers with home loans who pay on time

Piraeus Bank, Greece’s largest lender by assets, announced the launching of a reward programme for borrowers with home loans who service their debt regularly and have no arrears.

The move is an attempt to embed a culture of paying on time in a country where many borrowers struggled to service their debts during the country’s economic crisis.

Saddled with € 80 billion of non-performing loans (NPL), Greek banks have been shedding non-core assets and shrinking branch networks to reduce the pile.

The NPL ratio of Greece’s four major banks, including mortgages, remained the highest in the European Union at the end of 2018 – more than 12 times bigger than the EU average of about 3.2%.

Piraeus said it would start returning cash to borrowers, equivalent to a 0.10% reduction of the interest rate on their home loans, in January every year. The benefit will be a lump sum for payments made during the previous year.

Under the programme, Piraeus will also offer home repair loans at preferential low rates of one-month Euribor plus a spread of 1.5%.

The reward programme will apply to borrowers who took out mortgages up to the end of 2014, the bank said.

Original Story: Euronews | Reuters/ George Georgiopoulos 
Photo: Piraeus Bank
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

Alpha Bank works on NPL securization plan

Following the steps of Eurobank, Alpha Bank is also working on a plan for the securitization of its non-performing loans (NPL) and their management by an independent company to which the lender’s competent staff will be transferred.

Named «Galaxy», this plan provides for the securitization of NPL’s worth over € 10 billion and the concession of their management to a company that will also absorb some 700 staff from Alpha, according to Kathimerini.

This is the so-called «carve-out» model based on splitting an activity from a company to form a new entity, which has been applied in countries such as Spain and Italy where banks had similar NPL problems. In the last 12 months this model has been adopted in Greece by Eurobank, while Piraeus has opted for a similar version.

Alpha will soon be putting this option to its board for approval so that it can launch procedures to find an investor. Viewed as the fastest and most efficient way for Alpha to tackle its bad-loan problem, this solution is also seen reducing costs for the bank via the transfer of staff to the new entity.

The same sources say that the solution proposed is closer to Eurobank’s model, i.e. the securitization of loans, so that they can be removed from the bank’s books and Alpha’s financial accounts can be streamlined.

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


Brazil economic recovery stalls in July

Economic activity in Brazil fell slightly in July, a central bank indicator showed, running counter to other data that had suggested the economy started the third quarter on a solid footing.

The central bank’s IBC-Br economic activity index, a leading indicator of gross domestic product (GDP), fell 0.16% in July from June, the first decline in three months.

Other economic data reports for the month of July released earlier this week showed bumper retail sales and strong activity in the dominant service sector, both rising at the fastest pace this year.

Friday’s figures might serve as a reminder that the economic recovery remains uneven and lacking sustained momentum. The index has risen only two months this year, in May and June.

So far this year, activity is up 0.78% on the same period in 2018, the IBC-Br index shows, largely in line with consensus market, government and central bank estimates that the economy will grow by around 0.8% this year.

Over the last 12 months, activity is up 1.07%, the central bank said.

Both these longer-term trends reflect the tepid recovery from the 2015-16 recession, a key reason why the central bank is widely expected to cut interest rates again next week.

The economy expanded by 0.4% in the second quarter, having contracted by 0.2% in the first. Economy Ministry officials reckon the worst is now behind it, although unemployment remains high and the global outlook is increasingly challenging.

Original Story: Reuters |  Jamie McGeever 
Photo: Photo by Bruno Neves from Free Images
Edition: Prime Yield

Hipoges reinforces in Greece with the acquisition of Alsvit

HipoGes strengthened its presence on the Greek market by acquiring Alsvit, having completed a majority shareholding agreement with that management services provider. The expansion into Greece started two years ago.

During this period, HipoGes has incorporated professionals in key positions to manage its Greek subsidiary. Currently it collaborates with one of the country’s leading financial entities on a debt recovery project and  it’s involved in several processes of NPL portfolios.

Alsvit is a REO Management Services company with over 12 years of experience in the Greek market, working with the country’s leading financial institutions and investors, providing a wide range of REO services, from asset valuation and pre-acquisition support, to sale preparation and execution. Alsvit is also active in construction, and has built and refurbished commercial and residential buildings, including a large number of branches for Greek banks.

«With this partnership, HipoGes guarantees professional and quality REO services in the Greek market and, at the same time, it incorporates knowledge and expertise in a new market where great development is expected, says the company in a press release.

Original Story: Hipoges | Author: PR 
Photo: HipoGes Site
Edition: Prime Yield

Brazil: outstanding loans go down, default go up in July

The amount of outstanding loans in Brazil fell 0.2% in July from the previous month to R$ 3.290 trillion, representing some 46.9% of gross domestic product, the central bank said.

Loan defaults edged up to 4.0% from 3.8% in June, while lending spreads widened to 31.6 percentage points from 31.5 percentage points the month before, the central bank said.

Original Story: Reuters | Auhtor: Marcela Ayres 
Photo: Photo by Cesar Fermino from Free Images
Edition: 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

Greece’s four systemic banks slash NPEs stock by over € 15 billion in a year

Greece’s four systemic banks have reduced their stock of nonperforming exposures (NPEs) by € 15.3 billion in the last year, as their financial reports at the end of June showed that their total NPEs stood at € 78.8 billion, compared to € 94.1 billion a year earlier.

This reduction is the outcome of loan restructurings and settlements as well as the extensive sales of loan portfolios.

According to the second-quarter results issued by banks, Eurobank considerably reduced its NPE stock from € 18.9 billion a year earlier to € 14.3 billion, bringing down its share of NPEs from 40.7% to 32.8%of all loans issued.

Alpha Bank cut its NPEs from € 28.8 billion in June 2018 to € 24.7 billion last June, reducing the NPE share from 51.9 to 48.1%.

National also significantly contained its NPEs, from € 17 billion to € 13.7 billion within a year, pruning the share of NPEs from 42.4% at end-June last year to 36.5%just over two months ago.

Piraeus Bank lightened its load of NPEs from € 29.4 billion to € 26.1 billion by end-June, but it still has the largest sum, as well as the biggest NPE share, which came to 51.4 %, from 54.7% in June 2018. Within this month the lender is expected to complete an agreement with Swedish group Intrum for the concession of the management of Piraeus Bank’s entire NPE portfolio. Next year Piraeus is targeting the sale of NPE portfolios totaling € 4.5 billion.

Eurobank is also in the process of conceding NPE portfolios, aiming to bring its NPE index below 16% by the end of this year and to less than 10% by the end of 2021. National aims to contain its NPE stock by another € 1.8 billion, mainly via portfolio sales, while Alpha is eyeing the sale of €5.5 billion of loans in total this year.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Photo: Site Alpha Bank
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

Haya Real Estate’s AuM increased 14% up to €45.3 billion until June

Haya Real Estate (“Haya”), the Spanish market leader in the management of real estate debt and property assets reached €45.3 billion in Assets under Management (AuMs) at the end of the first half of the year, which represents a 14% increase versus December 2018.

Operating results (adjusted EBITDA) for H1 2019 amounted to €36.4 million (LTM €104.1 million). Including a large portfolio sale of over €1 billion by one of its core clients, completed in July, the adjusted EBITDA for H1 2019 would have been €55 million (LTM €123 million).

The Company has been working on a cost reduction plan since the beginning of 2019 aimed at optimizing its cost structure and creating a sustainable and more efficient business model for the future.

During the first half of 2019, Haya also reported a strong Free Cash Flow of €38.6 million (€120.4 million on an LTM basis), representing a cash conversion above 100% in the period due to the improvement in working capital coming from strong collections in the period. The corporate net debt at the end of June’19 was €427 million, with a proforma net leverage ratio of 3.3x including the large portfolio sold by one of its core clients.

The company’s transaction volumes were €1.7 billion in H1 2019, driving total revenues to €118.6 million (LTM €262.2 million) impacted by lower volume fees due to lower activity in REDs and REOs, partially offset by an increase in management fees and other revenues as a result of the contribution from new contracts (Divarian, BBVA and Apple), and other existing contracts, as well as from the good performance of the Advisory division. Including the portfolio sale contribution, transaction volumes would have been above €2.8 billion in the period (+20% YoY).

Original Story: Haya Real Estate | Press
Edition: Prime Yield

Greek banks met NPL shrinking targets this year

Greek banks have met their targets on reducing non-performing loans (NPLs), European Central Bank’s (ECB) Andrea Enria said in an interview to Eesti Ekspress, an Estonian newspaper.

Speaking on NPLs in southern European banks overall, the chairman of ECB’s Supervisory Board said that ECB had a very strong policy plan on dealing with NPLs, including what targets to set. The policy, he said, was successful, as over € 1 trillion in loans were reduced to € 580 billion.

The reduction includes Greek banks, he said which succeeded in meeting their reduction targets this year and will continue to reduce them next year. The ECB is following their progress, he told the newspaper

Original Story: The National Herald | Author: Ana
Photo: Photo by Toomas Järvet from Free
Edition: Prime Yield

BTG Pactual’s loan book expected to growth by 30% in 2019

Latin America’s largest independent investment bank, Banco BTG Pactual SA, expects its loan book to grow at least 30% this year, Chief Financial Officer João Dantas told Reuters.

«Companies started to ask for loans at a more regular pace and the potential approval of a pension reform is likely to increase demand for loans,» said Dantas, adding that the bank has appetite for a higher pace of growth in loans.

BTG’s expanded loan book stood at R$ 43.6 billion in June, up 33% from a year earlier and 8.5% from March.

Besides extending loans to large companies, BTG has been seeking small- and medium-sized corporate clients as a way to expand its loan book.

Dantas said the bank targets providers of services and products to its own big clients through a digital platform of receivables-backed credit.

In addition to loans, Dantas said the bank will offer checking accounts for small companies next year.

BTG’s move comes as an increasing number of digital platforms has been targeting smaller companies, such as C6 Bank and Nubank.

BTG posted a 50.2% jump in second-quarter recurring profit, as trading and proprietary investment gains increased, as well as management fees.

Recurring net income, which excludes onetime items, rose to R$ 1.029 from R$ 685 million a year earlier.

BTG’s total second-quarter revenues came in at R$ 2.181 billion, up 76% from the same period a year earlier, mainly helped by trading gains.

Original Story: Reuters | Author: Carolina Mandl 
Photo: BTG Pactual site
Edition: Prime Yield

Spanish banks already cleaned up €130 billion in NPL from its balance sheets

The financial entities working in Spain have already cleaned up almost € 130 billion in non-performing loans (NPL) from their balance sheets in less than six years, since December 2013 when the NPL ratio totalled its historic peak of 13.61%.

Then, the NPL in the hands of the banks amounted to € 197.045 billion, comparing to the € 67.795 billion recorded in May 2019 – regarding a total credit volume of € 1,448 billion, once again, very much lower than the € 1,202 billion of last May. As a result, the NPL ratio stood at 5.64% in the end of May, hitting its lower since September 2010 and being almost eight percentual points below its peak.

The gradual improvements in the Economy and Employment, together with refinancing granted by the bank and the sales of NPL portfolios to investment funds have contributed to this NPL fall, which could reach the 5.35% by the end of the third trimester of 2019, according to the rating agency Axesor.

Still, the default ratio of real estate and construction companies should be 7.12% in the end of the third trimester, with € 7.541 billion in non-performing assets, adds Axesor. In the first quarter of 2019, this ratio stood at 9.9%, comparing with its high of 37% reached in December 2013.

The credit granted to societies related to real estate should keep falling over the next few months and is expected to hit the € 110.438 million by the end of the third quarter, far bellow the € 0,5 billion recorded in 2009.

Original Story: Expansión | Author: Expansión
Photo: Photo by Pablo Rodríguez from FreeImages
Edition & Translation: 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: Matthew Bowden
Edition: Prime Yield

National Bank of Greece sells € 1.2 billion unsecured NPL to CarVal

National Bank of Greece has agreed to sell € 1.2 billion euros of unsecured non-performing loans (NPL) to asset manager CarVal Investors as part of efforts to clean up its balance sheet.

«The price of the transaction was above 9% of the unpaid principal,» National Bank said.

The management of Greece’s second largest bank wants to reduce its NPL portfolio to around 5% of total loans by 2022, from 41% at the end of 2018.

Original Story: Thompson Reuters | Lefteris Papadimas 
Photo:Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

Cerberus takes a real estate portfolio from Sabadell for €314 million

US fund Cerberus, through a subsidiary, has reached an agreement with the Spanish bank Sabadell to acquire a real estate portfolio for € 314 million. These assets have a net value of € 342 million, therefore the bank had to provision losses of about € 20 million.

The deal was closed through Cerberus Capital Management, a subsidiary of the US fund; with the bank headed by Josep Oliu keeping the control of a 20% stake in the buyer company, as explained in a note sent to Spain’s Stock Market Comission (CNVM).

This sale joins the macrooperation closed last July, in which the bank sold real estate assets valued in € 9.1 billion. These portfolios sold have a net nominal value of € 3.9 billion.

Original Story: EJE Prime | Author: News
Photo: Sabadell site
Edition & Translation: Prime Yield

Spanish banks waiting EU’s Court decision on whether they be forced to repay billions


Spanish banks are awaiting a key legal opinion on whether they should be forced to pay billions of euros in compensation for the way they sold a certain type of mortgage.

Advocate General Maciej Szpunar of the EU Court of Justice is set to publish a non-binding opinion on whether the lenders misled customers by failing to provide sufficient information when selling loans tied to the Bank of Spain’s Mortgage Loan Reference Index, or IRPH. The court’s rulings usually come four to six months later and follow such advice in a majority of cases.

The case has drawn parallels with the U.K.’s payment protection insurance scandal, which resulted in tens of billions of euros of compensation to customers. The Spanish banks could be ordered to pay clients as much as € 44 billion, Goldman Sachs Group Inc. estimated.

«In a worst-case scenario, this is a very serious problem,» said Pablo Manzano, vice president of the global financial institutions group at credit-rating agency DBRS. «The intensity could be less than PPI or it could be more.»

A Million Loans

About € 108 billion of home loans linked to IRPH, marketed as an alternative to the Euribor benchmark, were sold since 1999, according to DBRS. Some 1 million customers in Spain bought them, paying an average of 25,000 euros more than those who took Euribor-linked loans, according to an estimate by the Association of Financial Users (Asufin).

Several banks have said they’re optimistic that the EU’s top court will uphold a 2017 ruling by Spain’s Supreme Court, which concluded the methods used to sell IRPH weren’t abusive. Still, Spanish banks bore the burnt of a ruling from the European court as recently as 2016, when it ordered them to pay back billions of euros for imposing so-called mortgage floors — clauses in loan contracts that prevented borrowing costs from falling in line with benchmark rates.

In DBRS’s Manzano opinion, the European court is likely to side with banks this time, especially since a ruling against them could open up claims over other types of mortgages across the EU where the rate calculation wasn’t sufficiently explained.

Europe’s highest court is reviewing a case referred to it by a Barcelona tribunal. The waters have been muddied somewhat by a report issued by the European Commission’s legal team in September 2018 that said Spanish judges should be allowed to nullify contracts and offer customers the opportunity to switch to obtain better rates.

Banks haven’t reported the full extent of their exposure to potential claims, only publishing their outstanding IRPH-linked mortgages. CaixaBank SA has the most with € 6.4 billion as of June 30. That’s followed by Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA with € 4.3 billion and € 3.1 billion respectively.

Original Story: Bloomberg | Author: Charlie Devereux 
Photo: Photo by Philipp K from Free Images
Edition: Prime Yield