Bank’ deposit inflows drop slightly in November

Greece’s private sector bank deposits fell slightly in November after a rise in the previous month, according to central bank latest data.

Businesses and household deposits dropped to €139.57 bn from €139.69 bn in October, Bank of Greece data showed.

Greek banks have seen deposit inflows over the space of more than two years after the country clinched a third bailout to stay in the euro zone in July 2015.

Athens exited its latest bailout in August 2018 and is relying on bond markets to refinance its debt.

Greece fully lifted remaining capital controls on Sept.1 as the economy continues to recover after the tumult of three international bailouts since 2010. 

Original Story: Ekathimerini | Reuters 
Photo: Photo by Pierre Amerlynck /
Edition: Prime Yield

Santander raises limit of real estate financing to 90% of value

In the midst of the rate war in Brazil’s mortgage market, Santander announced the raising of the financing limit to 90% of the property’s value, up from the previous 80% limit.

In the midst of the real estate financing rate dispute in the country, the bank chose to resort to a new weapon: the option of providing a lower down payment, thus becoming the only institution in Brazil to work with a minimum ten percent down payment.

The new ceiling is applied to the Constant Repayment System (SAC).

Original Story: The Rio Times|Richard Mann 
Photo: Photo by Svilen Milev /
Edition: Prime Yield

Tokio Marine sets JV to expand into Brazilian mortgage and homeowners insurance market

Tokio Marine Holdings, Inc. has announced the execution of a definitive agreement between its subsidiary, Tokio Marine Seguradora S.A., and Caixa Seguridade Participações S.A, an insurance holding unit of Caixa Econômica Federal, to establish a joint venture insurer to underwrite mortgage and homeowners insurance.

Caixa Econômica Federal is a Brazilian state-owned bank and leading institution on the Brazilian mortgage industry, holding more than a 70% market share in the country’s mortgage loan market.

The definitive agreement between the two subsidiaries is expected to further diversify the operations of Tokio Marine Holdings through the expansion into the mortgage and homeowners sectors of the marketplace, both of which are growing. Tokio Marine Seguradora has been expanding its operations and at the same time improving its profitability and is now ranked 5th in terms of market share in the Brazilian auto market.

The establishment of the joint venture with Caixa is a continuation of Tokio Marine Group’s ambitions to expand in both mature and emerging markets through acquisitions and partnerships.

In terms of the structure of the joint venture, Caixa is set to establish a new insurance company and allocate new shares to Tokio Marine Seguradora equivalent to 50.1% of the insurer’s voting shares upon a capital contribution of approximately US$ 370 million (R$ 1.52 Bn).

The company name is yet to be determined as is the Chief Executive Officer (CEO). However, an overview of the joint venture at this stage reveals that its head office is expected to be in São Paulo, Brazil.

Original Story: Reinsurance News | Luke Gallin
Photo: Tokio Marine Seguradora
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

Greek banks shrank their bad loans pile by more than €15Bn in a year

By end-September Greece’s four systemic banks had reduced their bad loans by more than €15 Bn compared to the same time last year, trimming their nonperforming (NPL) credit to €74 Bn on a group level from €89.6 Bn at end-September 2018.

This has paved the way for a dynamic fourth quarter, by the end of which some significant sale and securitization transactions will have been agreed.

These include the securitization of Eurobank’s Cairo portfolio worth €7.5Bn and the sale of its FPS loan management offshoot expected by year-end, and the securitization of Alpha’s Galaxy portfolio of €12Bn along with the sale of Cepal in the first half of 2020. In 2020 Piraeus will carry out two transactions totalling €3Bn while the National will securitize loans equal to €3.5Bn.

Original Story: Tornos News |  News 
Photo: Photo by JonteRemos/
Edition: Prime Yield

Haya selected for the management of Sareb’s rental portfolio

Haya Real Estate, one of Spain’s market leader in nonperforming loans (NPL) and real estate asset management, has been selected by the Spanish band bank Sareb for the management of its rental portfolio, comprising more than 3,000 residential and tertiary rented assets.

The portfolio is made up of 80% residential assets and 20% of tertiary properties distributed throughout the Spanish geography. 40% of the assets are located in the Valencian Community, followed by Madrid Community, Castilla-León and Castilla-La Mancha, with 24% of the total portfolio, also, the South of Spain specially Andalusia and the Canary Islands, with 16%.

This new contract provides continuity to the rental management services that Haya has been delivering during the last years for Sareb. Efective from January 1st 2020, this asset management agreement is a strategic business line for Sareb, specially focused in adding value to the rental assets in the mid-term. The contract will last for two years.

This rental management contract is additional to the mandate granted in October 2019 by Sareb to manage the assets of the Esparta project, a €8.4 Bn (net book value NBV) portfolio of loans and REO (Real Estate Owned) up to June 2022.

Original Story: Eje Prime | News 
Photo: Haya Real Estate
Edition: Prime Yield

Brazil’s Caixa gets ready for the IPO of its insurance unit

Brazilian state lender Caixa Economica Federal has chosen the bank syndicate that will manage the initial public offering (IPO) of its insurance unit, Reuters said.

According to the three sources with knowledge of the matter listened by the news agency, Morgan Stanley will lead a 10-bank syndicate including the investment banking units of Banco Bradesco SA, Itau Unibanco Holding SA, Banco Plural, Banco BTG Pactual, Banco do Brasil SA, Credit Suisse AG, Banco Santander Brasil SA, Bank of America and Caixa Economica Federal.

Insurance unit Caixa Seguridade will be listed in Brazil, although the banks expect to market the offering in the United States also. The banks expect to value it at around R$60 Bn ($14.77Bn), the sources said.

Caixa Economica Federal did not reply to a request for immediate comment.

Caixa plans to sell a stake of about R$10 Bn [$2.5 billion] in the insurer. Caixa Seguridade will not raise cash by issuing new shares, the sources said.

Caixa CEO Pedro Guimaraes wants an IPO in the short term, in March or April, but Caixa Seguridade still needs to sign agreements with private insurers to sell different kinds of insurance to its clients.

On January 5th, Caixa announced an agreement with Japan’s Tokio Marine to sell home insurance to its clients. Tokio Marine will pay R$ 1.5 Bn to Caixa.

Caixa Seguridade posted a net income of R$1.2 Bn for the first nine months of 2019.

Original Story: Insurance Jornal |  Carolina Mandl 
Photo: Caixa Economica Federal
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

Alantra advises Eurobank on the largest Greek public NPL securitization to-date

Greece’s Eurobank has completed its second public NPL (Nonperforming Loans) securitization, Project Cairo. This is the largest Greek NPL securitisation to-date, with a total GBV of €7.5bn is comprised of non-performing multi-asset loans at varying stages of restructuring and enforcement processes. Alantra Credit Portfolio advised the operation, acting as co-arranger and financial lead advisor to the deal.

This is expected to be also the first securitisation that will opt-in for Hellenic Asset Protection Scheme (“Hercules”), the Greek government recently approved HAPS guarantee scheme.

Cairo SPV will issue 3 classes of Notes’ notional amounts as per following: Senior Note €2.4 billion, Mezzanine Note €1.5 billion and Junior Note €3.6 billion. The Cairo transaction’s parameters have accounted for the estimated cost of Hercules and are subject to the targeted rating confirmation.

Eurobank will retain 100% of Senior Notes and will opt-in for the Hercules. Furthermore, it will retain 5% of Mezzanine and Junior Notes to comply with risk retention requirements.

20% of the Mezzanine Securitisation Notes and the minimum required percentage of the Junior Securitisation Notes will be sold to doValue S.p.A., the leading NPL servicer in Italy. The implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes corresponds to 33.3% of the total gross book value of the securitized portfolio.

75% of the Mezzanine Notes and 44.9% of the Junior Notes to be potentially distributed as dividend in kind to shareholders, subject, inter alia, to corporate and regulatory approvals.

The transaction took place in parallel with the disposal of part of FPS to doValue, which – adding FPS to its existing business in Italy and Spain – is set to establish itself as the top loan servicer and REO manager in South Europe. The Bank has recently sold portfolio Pillar to PIMCO, which will be also serviced by FPS along with the remaining €11.3bn performing and non-performing exposures that are still retained by Eurobank.

With this milestone agreement, Eurobank enters the final stages towards completion of its accelerated plan for the clean-up of its balance sheet and becomes the first Greek bank to turn the corner on the major legacy issue of the NPE stock. Together with Pillar, they are the first NPE securitizations in Greece and key components of Eurobank’s frontloaded NPE reduction strategy, which aims to achieve the targeted NPE ratio of below 15%.

«This transaction represents a landmark deal for the Greek Market, the inaugural NPL securitization to opt-in for the new Hercules asset protection scheme. We are proud to have played an instrumental part in it», Vasilis Kosmas, Partner of Alantra, commented.With an NPE pipeline currently sat at over €20bn across the Greek banking sector, Greek HAPS guarantee scheme approved, rising real-estate values, and re-worked borrower protection laws, the market is primed for another active year ahead.

Original Story: Webwire
Photo: Eurobank Site
Edition: Prime Yield  

Rio de Janeiro

Banks project growth for Brazil’s economy

Economists and financial institutions consulted by the country’s Central Bank estimate that the Brazilian economy should have ended 2019 with a growth of 1.17%. As for 2020, the projection is for a 2.30% Gross Domestic Product (GDP) expansion.

As to inflation, the estimate for the Extended National Consumer Price Index (IPCA) increased for the eighth time running, to 4.04% in 2019. For 2020, the inflation estimate increased to 3.61%. The projection for the following years remains at 3.75% for 2021 and 3.50% for 2022.

The benchmark interest rate, known as Selic, is currently at 4.5% per annum designed by the Monetary Policy Committee (Copom) and, according to the financial institutions, should remain at this level until the end of the year. The institutions estimate that Selic will end 2021 at 6.38% per annum. As for the end of 2022, the projection remains at 6.5% per annum. 

Original Story: Brazilian Arab News Agency |Agência Brasil 
Photo: Photo by Bruno Leiva /
Edition: Prime Yield

Alpha Bank determined to turn the page of its NPL problem

Alpha Bank’s management has designed a strategy to reduce its NPL (Nonperforming Loans) problematic stockpile and transform the group so that it can «turn the page,» the lender’s CEO Vassilis Psaltis told Kathimerini, stressing that the Greek economy is on a steady growth path and that the international investment community is regaining faith in the country’s prospects.

In the same interview, Psaltis notes that the time has come to make up for the ground lost during the crisis, explaining that Alpha Bank will be at «forefront of this national effort, securing credit to households and businesses of €14 bn by 2022

A few weeks ago, the bank introduced Galaxy, the largest portfolio of NPLs in Greece to date which is set for securitization in 2020. And, according to the CEO, this plan «reflects Alpha Bank’s commitment to leave the problems of the crisis behind and “become a bank once again,” reasserting its leading role as a financier of households, businesses and the Greek economy».

«This is not just the most significant securitization of nonperforming exposures in Greece, but the third largest in Europe», Psaltis stressed, adding that this transaction will allow Alpha to reduce its NPE rate from 44% in 2019 « to below 20% in 2020 and eventually to a single-digit rate in 2022. The percentage of NPLs in default for more than 90 days will fall below 5% in 2022».

«We are decisively proceeding to a cleanup of our balance sheet in order to devote all our energy to what we are doing really well, which is banking and financing the economy», Alpha’s CEO asserted. However, he reckons that the «we are doing it now, not only because we have the experience and capital strength to aim high, but also because three crucial conditions are now being met: Supervisory authorities are urging similar initiatives, a dramatic improvement in macroeconomic figures has been recorded, one that brings our country to the very center of investment interest, and thirdly, Hercules, the Greek asset protection scheme, has been activated».

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

Santander Brazil takes full stake of Banco Olé

Santander Brazil closed the agreement to buy the remaining 40% of Olé Bonsucesso Consignado SA for €355 million. The Brazilian subsidiary of Santander will have 100% control of the company’s share capital, according to a statement sent to the Sao Paulo Stock Exchange.

«By fully assuming the control of Olé Consignado, we have a great opportunity ahead of us to boost our growth in the Brazilian market,» said the executive vice president and chief financial officer of Santander Brasil, Ángel Santodomingo.

Banco Olé specializes in consigned credit – loans whose fees are deducted from the payroll – and the operation depends on the approval of the corresponding competition authorities. Banco Santander obtains in Brazil about 30% of the group’s total profit, its largest market, with 3,680 branches and about 50,000 employees.

Santander Brasil and Banco Bonsucesso agreed on a joint venture in 2015, with stakes of 60% and 40%respectively.

Original Story: The Corner | News 
Photo: Santander
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
Edition: Prime Yield

Spanish banks speed up the sales of bad credit in the end of the year

Spain’s Banks have speed up the sales process of their nonperforming loans (NPL) portfolios in the end of the year. The regulatory watchdogs are increasing the pressure towards an NPL ratio reduction among the country’s banking system.

Since the end of 2019 and up to the beginning of the new year, Spanish banks have sold – or are about to sell – more than €8 billion in NPL. The big news in relation to the last few years is that now these big portfolios aren’t just comprising mortgages only, but also consumer loans without collateral (unsecured) granted to companies and households.

In fact, these days there is more value “unsecured” than “secured” among the latest portfolios sold. Its presence is increasingly bigger in the portfolios, and is no coincidence that the nonperforming rate in the consumer credit is already surpassing the 5% of the general ratio, and in volume, has already reached €5 billion in overdue loans with a double digit annual growth.

The largest porftolios recently sold are those from BBVA, totalling €5 billion in toxic debt of which half correspond to unsecured loans – the largest portfolio with these features to be ever sold in the Spanish market. In specific, the bank sold its Project June, woth more than 300,000 upaid loan contracts, to opportunistic Swedish fund Intrum. On the other hand, in the end of 2019  the bank also sold its €2.5 billion Project Hera, made up largely of loans to SMEs, to Cabot and Carval.

Caixa Bank, for its hand, completed the sale of the €865 million Astún portfolio, comprising unpaid credits to households and corporates. Intrum was the buyer, along with 50% of the Vento portfolio, sold by Banco Sabadell.

Original Story: El Confidencial | Óscar Jimenez
Photo: Photo by Victor Iglesias from FreeImages
Edition: Prime Yield

Brazil’s Government proposed central bank bill to gird against banking crises

On December 23rd Brazil’s government sent Congress a bill designed by the central bank to regulate financial firms during a banking crisis that mandates the use of public money for bailouts, but only as a last resort.

If approved, the bill would create two new mechanisms that would dictate how different financial firms would be treated.

The first – the so-called Stabilization Regime – is aimed at larger banks that pose a risk to the country’s banking system, but will require specific secondary legislation to dictate how firms are chosen.

The second, known as the Compulsory Settlement Regime, would be aimed at smaller entities and focus on removing the company’s senior managers and board. The company and shareholders’ money would be prioritized in the case of any losses.

Failing that, losses would aim to be covered by the industry itself, with contributions from other banks to an emergency fund known as the Credit Guarantee Fund.

Only as a last resort would the government step in and provide a publicly funded bail-out, according to the bill.

Brazil’s Fiscal Responsibility Law currently bars the government from bailing out banks, although specific laws can be passed during times of financial crisis to circumvent the law and provide public assistance.

The latest bill aims to modernize the Brazilian government’s actions during a banking crisis and place greater responsibility on the banks themselves to cover their losses, meaning less of a burden on Brazilian taxpayers, said Climerio Leite Pereira, the head of the central bank’s resolution and sanctions department.

Original Story: | Reuters 
Photo: Photo by Cesar Fermino /
Edition: Prime Yield

PQH sells €1bn impaired loans portfolio to Intrum Hellas

PQH, the liquidator for bad banks in Greece, has signed a deal to sell a €1 Bn portfolio of unsecured impaired loans to loan servicer Intrum Hellas. The deal was agreed at a price of €71.1 Mn, meaning PQH will receive 7% of the outstanding principal.

The portfolio comprises unsecured retail and small business soured loans. Morgan Stanley advised PQH on the deal.

Intrum Hellas was created last month as a joint venture of Greek lender Piraeus Bank and Swedish loan servicer Intrum. It is the biggest independent servicer of non-performing loans and real estate assets in the Greek market, managing Piraeus Bank’s €26 Bn of non-performing exposures (NPEs), while Greece’s other 18 licensed credit servicers were handling a total of €17.5 Bn of non-performing loans as of June 2019.

Original Story: Ekathimerini | Author: News 
Photo: Intrum site
Edition: Prime Yield

CarVal and Cabot buy BBVA’s second largest written-off loans portfolio (€2,5 bn)

Following the sale of “Project Juno”, BBVA signed the transfer of a portfolio comprised of written-off loans to small and medium sized enterprises (SMEs) to Cabot and funds managed by CarVal Investors. Named “Project Hera”, this was the banks second largest written-off loans portfolio, with an approximate gross value of €2.1 Bn.

Just a few days before announcing this deal, BBVA had announced another sale of a portfolio of written-off loans (known as “Project Juno”). In this case, the portfolio consisted of loans to consumers with a gross value of €2.5 Bn. The operation was BBVA’s largest sale of a portfolio of written-off loans so far. 

Over the past two years, BBVA has carried out several operations involving the sale of loan portfolios – mostly loans to developers and mortgages. Among them, the sale announced in December 2018 stands out. It was a portfolio of loans (known as (“Ánfora”) with an approximate gross value of €1.2 billion, primarily consisting of mortgages (both doubtful and bad loans). In addition, in June 2018, the bank sold a portfolio of loans to developers with a gross value of €1 billion, called “Sintra”; and in July 2017 it sold another portfolio of loans to developers with a gross value of around €600 million, known as “Jaipur”. 

In November 2017, BBVA announced the transfer of its real estate business in Spain to Cerberus Capital Management, L.P., an operation that was completed in October 2018.

Original Story: El Confidencial | J. Zuloaga
Photo: BBVA
Edition: Prime Yield

Brazil’s Economic recovery boost stronger loan demand in 2020

The expected economic recovery in Brazil is set to drive stronger loan growth next year but banks are likely to see their profitability under pressure due to fiercer competition from fintechs.

After an expansion of around 1% in 2019, Latin America’s biggest economy is expected to grow almost 2.5% in 2020.

Loans could grow 8.2% compared to an estimated 6.6% in 2019, according to a survey from local banking federation Febraban. 

This year’s expansion is likely to be driven by commercial banks, while development bank BNDES is expected to take a more conservative approach in terms of subsidized loans.

Loans from commercial banks are projected to grow 12.3% in 2020, while subsidized loans are expected to increase 2.5%. 

The government and the central bank are embarked on a strategy to reduce high concentration in the banking industry by making it easier for fintechs to enter the market. 

The five largest banks, Banco do Brasil, Caixa Econômica Federal, Itaú Unibanco, Bradesco and Santander Brasil, command nearly 80% of all loans in the country. 

In a recent interview, the CEO of Bradesco, Octavio de Lazari Junior, said that the era of «stratospheric gains» are over for Brazilian banks as interest rates have fallen to record-low levels and fintech competition is escalating. 

Brazil’s Selic base interest rate is at 4.5%, the lowest level ever, and banks can no longer park large portions of reserves in government bonds and obtain high returns as they did for years when the Selic was in double-digit territory.

Real Estate segment shines bright

The rapid growth of fintechs have put banks under pressure in several market segments but they still reign supreme in terms of mortgage lending. 

Loans for the purchase and the construction of homes with funds from Brazil’s saving and loan system (SBPE) has shown strong growth this year.

SBPE-based mortgage financing totaled R$ 70.0Bn reais at the end of November, up 36.4% year-on-year, according to Brazilian real estate loan and saving association Abecip.

In the period, 266,290 homes were financed compared to 204,940 units in the previous 12-month period.

The segment is attractive for banks as the long-term mortgage loans carry low default risk and give banks ample opportunities to cross-sell other products and services.

Original Story: Bnamericas |News 
Photo: Photo by Bruno Neves /
Edition: Prime Yield

Sareb is €34 Bn property hangover, says Bloomberg

Spanish bad bank Sareb’s – whose €34 Bn portfolio of non-performing real estate assets is Europe’s largest, according to investment banking consultancy Evercore -, record of selling assets has been far from stellar.

According to Bloomberg, investors are finding out that a complicated operational structure and conflicting shareholder interests make buying assets from Sareb difficult. Its chief, Jaime Echegoyen, concedes Sareb’s record isn’t exemplary.

«We try to guarantee that the investor clients receive the service they deserve in each one but it’s possible it’s not always like that,» he said in an interview in Madrid.

With Spain’s real estate market losing some steam after half a decade of growth, doubts are mounting about Sareb’s ability to meet its original mission — to pay back by 2027 the more than €50 Bn in capital and debt injected into it by the state and banks.

The bad bank said this week that it’s shaking up its management structure. It plans to appoint a chief executive officer to take over business responsibilities so Echegoyen can focus on corporate issues.

Sareb was created in 2012 when Spain was in the throes of a financial crisis after its real estate market bubble burst. About half way through its 15-year lifespan, it has sold only about a third of the net €51 Bn of defaulted loans and real estate assets it bought at a discount from troubled banks. With the reduction of bad loans tailing off since 2017 and with investors picking off the jewels, Sareb is sitting on more and more unattractive assets.

The entity may have to accept lower returns if it wants to wind-up the operation as planned by 2027, said Elena Iparraguirre, director of financial services ratings at S&P Global Ratings.

Creating Sareb was a condition of Europe’s bailout of Spain’s banks. It allowed lenders that took state aid, such as Bankia SA, to jettison soured assets. With mounting public anger about the bailout, the government persuaded banks such as Santander and CaixaBank SA to buy a 55% stake in Sareb. The government controls the rest.

But Sareb was dealt a difficult hand. It was given no time to build a team, so it relied on structures banks already had in place. Four bank-owned servicer companies divided up and marketed portfolios assigned to them, with commissions depending on the prices they secured.

The servicers were later sold to global investment funds. 

Sareb’s objectives often diverge from those of the servicers. Both need to sell but Sareb can accept losses while the servicers driven by commissions are often unwilling to settle for lower prices.

Many of the assets Sareb took over from banks were grossly overvalued, according to a person with knowledge of the process. In some cases, holes were dug and foundations laid on properties to bump up their categorization and reduce the discount banks had to give Sareb, the person said. Sareb’s team of about 60 people had just a few months to put a price on more than 200,000 assets, with little time for on-site visits.

Sareb also has a conflicting relationship with its shareholding banks. While Sareb mainly reduces its stock one asset at a time, Spain’s banks, buoyed by the country’s economic recovery, sold their portfolios in huge packets at large discounts to funds. In the first half of this year, Spanish banks and funds sold €4.5 Bn of bad loans compared with €388 Mn in process for Sareb, according to data compiled by Evercore.

Yet when Goldman Sachs proposed to Sareb selling off a large portfolio, the idea was voted down by the board, comprised largely of bank representatives worried about flooding the market, people familiar with the operation said. Echegoyen says the deal failed because Sareb couldn’t offer the kind of discount such a large package would demand.

Sareb is trying to address some of its structural issues. It wants to renegotiate its relationship with the servicers to lower fees and take back control of some of the maintenance and legal activities. The bank has opened up the bidding process to other companies to drive competition.

Whatever Sareb’s record, one thing is incontrovertible, said Echegoyen. «We have saved the Spanish financial system,» he said. «It doesn’t mean Sareb was the white knight but we were part of a white knight – perhaps the shield or the lance or the horse

Original Story: Bloomberg | News 
Photo: Sareb (Linked IN)
Edition: Prime Yield

Value of loans serviced by domestic CSF incread in Q3 2019

The nominal value of loans serviced by domestic Credit Servicing Funds (CSF) increased in the third quarter of 2019, according to Bank of Greece’s official data.

In particular, the total value of loans serviced by CSFs increased by €1,967 Mn euros in the third quarter of 2019 and stood at €20,105 Mn, from €18,138 Mn in the second quarter of 2019.

The nominal value of serviced corporate loans increased to €5,408 Mn in the third quarter of 2019, from €5,367 Mn in the previous quarter. In further detail, the nominal value of loans to non-financial corporations (NFCs) increased by €41 Mn to €5,361 Mn at the end of the third quarter of 2019. Out of the total loans to NFCs, an amount of €3,719 Mn corresponds to loans to small and medium-sized enterprises (SMEs).

The nominal value of loans to insurance corporations and other financial intermediaries, serviced by CSFs, remained unchanged from the previous quarter, at €47 Mn.

The nominal value of loans to sole proprietors and unincorporated partnerships, serviced by the CSFs, decreased by €9 Mn from the previous quarter and stood at €2,256 Mn at the end of the third quarter of 2019.

The nominal value of loans to individuals and private non-profit institutions, serviced by the CSFs, increased by €1,936 Mn to €12,441 Mn at the end of the third quarter of 2019. In further detail, the serviced consumer loans decreased by €9 Mn to €10,105 Mn at the end of the third quarter of 2019, while the corresponding housing loans increased by €1,956 Mn to €2,329 Mn.

Original Story: The National Herald | Ana 
Photo: Bank of Greece
Edition: Prime Yield