Caixa studies further sales of NPL portfolios and five new IPOs

Brazil’s Caixa Econômica Federal (Caixa) President, Pedro Guimarães, said the bank is planning to resume operations aimed at the market and to completely focus in the sales of participations on its subsidiaries. 

The plans are to sell a share in five of its businesses: insurances, credit cards, asset management, lotteries, and digital banking. This last one is an asset that Caixa is still establishing, putting together the net assets created from the services delivered by the Caixa Tem app together with those from the millions of accounts created to the payment of the emergency state help. According to the executive, these public listings will be one of his legacy in the institution, stating that the presence of minority shareholders tends to strength governance. 

Part of the sales will be made throughout an IPO. “We want to resume operation in the capital markets. One of Caixa’s total focus is tocary out these IPO’s, including  that for the digital bank”, he said during an event from Credit Suisse.

Original Story: BNL Data | Editor’s Blog
Photo: Caixa Econômica Federal site
Edition and Translation: Prime Yield 

Greek banks loans subject to COVID-19 repayment relief hit $37 billion

Greek banks deferred repayments on €30 billion worth of loans last year to help borrowers cope with the financial fallout of the COVID-19 pandemic.

According to the country’s banking association, lenders granted payment deferrals to about 400,000 individuals and businesses between January and November.

The amount of loans under payment deferrals raises concerns that a chunk may become impaired when the period of grace ends, inflating the load of bad debt on banks’ balance sheets.

The European Banking Authority said in December that a deferral period cannot exceed nine months, from the time a loan is placed under deferral status.

In December, Greek’s central bank governor projected that banks were likely to be burdened by €8-10 billion of new impaired loans as a result of the pandemic.

Banks had already been working to reduce a mountain of impaired credit, the legacy of a 10-year financial crisis that shrank the country’s economy by a quarter.

Despite the reduction of non-performing loans (NPLs) by about €59 billion from a peak of 106 billion in March 2016, banks’ overall NPL ratio of 36% at the end of September remains far above the euro zone average of 2.9%.

The €30 billio of loans under payment moratoria does not include another 15 billion of mortgages and consumer and business loans already restructured, meaning banks have offered relief for €45 billion of loans in total, their association said.

Original Story: Reuters | George Georgiopoulo 
Photo: Photo by Jonte Remos from FreeImages
Edition: Prime Yield

BBVA sells a €700 million real estate loans and asset portfolio to KKR

BBVA announced the close of an agreement with global investment fund company KKR – primarily through its KKR Private Credit Opportunities Partners III fund – to transfer the ownership of a real estate loan and asset portfolio from Unnim with a gross value of approximately €700 million.

Dubbed “Dakar”, the portfolio consists of two types of real estate loans (with and without mortgage guarantees) and REOs (Real Estate Owned) assets.

Over the past three years, BBVA has completed several loan portfolio sale transactions, mostly real estate and mortgage loans. In December 2019, the Spanish bank completed its two largest sales of written-off loan portfolios: Project “Juno”, a portfolio with a gross value of approximately €2.5 billion, and the “Hera” portfolio, comprised of loans to small and medium sized enterprises (SMEs) with an approximate gross value of €2.1 billion.

Before, in December 2018 the bank completed the sale of  the €1.2 billion portfolio “agora” primarly consisting of mortgages (both non-performing and in default loans). In June 2018, BBVA sold a property development loan portfolio worth €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 Project “Jaipur”.

Furthermore, in October 2018 BBVA completed the transfer of its real estate business in Spain to Cerberus Capital Management. The closing of the transaction resulted in the sale of Cerberus of an 80% stake in Divarian, the company created to transfer the real estate portfolio. BBVA retained the remaining 20% stake.

Original Story: BBVA
Photo: BBVA site
Edition: Prime Yield

Banks under pressure: DBRS leaves a warning to Portugal

The European banking business will continue under strong pressure in 2021. Despite the expected economic recovery, the burden of non-performing loans will weigh heavily on the financial institutions in 2021, according to the Canadian rating agency DBRS, which points especially to countries like Portugal, Spain and Italy.

“The outlook for European banks remains challenging in 2021. We expect the revenue pressure banks faced in 2020 to continue in 2021,” says the DBRS report released this Thursday. “Given the tough revenue environment and low returns, reducing operating costs remain a clear priority, and the pressure to improve returns is likely to lead to further domestic consolidation in some countries.”

The pandemic generated a deep economic crisis, which has not yet materialised in a worsening of non-performing loans (NPLs) due to government support measures such as moratoria and credit lines with state guarantees. “Nonetheless, it is clear that loan losses will increase when government support ends. The trajectory of NPLs will remain a function of the length of economic restrictions, overall economic impact, as well as any additional support measures,” the agency warns.

The latest available data refers to the first nine months of 2020, and the DBRS analysis (which included 40 European banks, namely two Portuguese banks: Caixa Geral de Depósitos and BCP) indicates that there has already been an increase in NPL levels in Norway, Germany and the Netherlands mainly due to very low bases.

However, these are not the countries most at risk. “Banks in Portugal, Italy and Spain continued to reduce NPLs in 9M 2020, however, these countries still hold high levels of NPLs and have high NPL ratios relative to other European banks and above the average of the sample,” the agency notes. “There has been a large proportion of borrowers resuming payments after the end of the moratoria. But the capacity of borrowers to make payments depends on the economic shock experienced in each country.”

The beginning of 2021 arrived with new lockdowns in a number of European countries, including Portugal, so the economic impact of the pandemic is still uncertain. The extent of the restrictions will impact asset quality and the cost of risk in 2021.

“Capital levels remained solid in spite of weaker earnings. However, we expect the deterioration of asset quality in 2021 to trigger an increase in risk-weighted assets. In addition, internal capital generation could reduce given lower earnings and the resumption of dividends payment,” DBRS adds.

Original Story: ECO News
Photo: Photo by Sergey Klimkin in

CarVal buys a €250 million refinanced mortgage portfolio from Abanca

Abanca, the bank chaired by Juan Carlos Escotet, was the protagonist of the last banking operation in 2020 and the first in 2021. In addition to the first issue of subordinated bonds (AT1) this year, announced last week, an agreement was reached in extremis in 2020: the sale of a portfolio of 250 million in refinanced mortgages to the US fund CarVal Investors, according to financial sources consulted by El Confidencial.

Neither Abanca nor CarVal made any comments. This operation is one of those that were negotiated in the last days of 2020 with the aim of having it count in that year’s accounts, which will be presented in the coming weeks. Abanca put this portfolio up for sale in the middle of last year, in a competitive process known as the Eume Project. The sources consulted point out that there were moments when it seemed that the operation would not be successful, due to all the uncertainties that have existed on the mortgage market during 2020: pandemic, real estate prospects, regulation, court rulings and squatting.

The credits included in the Eume Project are up to date, although with some delays during the last 12 months. This type of refinanced loan is usually included within the ‘Stage 2’ fixed by the European Central Bank (ECB), for normal risk under special surveillance, which requires the institutions to advance losses. This factor, together with the possible deterioration of these mortgages due to the covid-19 crisis, led Abanca to accelerate their sale last year. In June, the Galician entity had real estate loans -with some kind of collateral linked to bricks- for a value of 18,850 million, of which 461 million were under special surveillance and 625 million were in doubt. Abanca’s default rate is 2.6%, one of the lowest in Spain, with higher figures for SMEs and the self-employed (5%) and consumer loans (4%).

Original Story: El Confidencial | Jorge Zuloaga
Photo: ABanca website
Translation/Edition/Summary/Adaptation: Prime Yield

Bank of Greece warns: new NPLs could go up to €10 bn

The burden of new nonperforming loans on Greek banks after the pandemic crisis is expected to come to 8-10 billion euros, relatively greater compared to that faced by other European credit institutions, Bank of Greece Governor Yannis Stournaras said recently.

Addressing the 8th Banking Forum, Stournaras said that Greek banks, already burdened with a high stock of NPLs, will face an even heavier burden in the future since they have exhausted the greater part – if not the entirety of – their capital reserves to deal with them. 

The central banker noted that despite the fact that Greek banks have managed to reduce their NPLs by around €50 billion since their peak in March 2016, they remain at very high levels (35.8% in September 2020), significantly above the EU average.

Stournaras stressed that Greek banks enjoy a satisfactory capital adequacy rate; however, this will be negatively affected by expected developments such as the implementation of IFRS 9 standards, the cost of securitizations of NPLs and the low quality of capital.

For these reasons, Stournaras reiterated the need for the creation of a so-called “bad bank,” to operate in parallel with the Hercules state guarantee scheme. 

His proposal, he said, would deal with the problem of deferred taxation as well and could lead to a further reduction of NPLs by €40 billion.

He asserted that the cost of this bad bank will be covered exclusively by banks.

Original Story: Ekathimerini | Business
Photo: Bank of Greece Site
Edition/Summary/Adaption: Prime Yield

BNDES launches public notice for sale of part of non-performing loans

The National Bank for Economic and Social Development (BNDES) will sell part of the defaulted credits that make up its portfolio. The announcement for the auction, which is scheduled for March 31, was launched on December 21. The list of credits for sale includes 323 operations involving 251 different debtors, with a total accounting balance of R$160 million.

The securities will be sold for the highest bid value. Interested parties must apply by January 15 and information about the portfolio will be available to qualified investors between February and March. Bids will be presented between March 25 and 30.

According to BNDES, the bonds for sale have been in the bank’s portfolio for more than 13 years, and in that period there have been several unsuccessful attempts to recover debts, either through renegotiation or legal actions.

All the credits come from indirect operations originated in banks that were interrupted in their activities by intervention or extrajudicial liquidation. By law, they have been subrogated to the BNDES, i.e., their ownership has been transferred to the development bank.

For the period of default, the credits were entered in the balance sheet of the BNDES at a loss. The bank’s objective with the assignment is to optimize the high cost of maintaining these assets that are difficult to recover and with limited returns.

The public notice states that the minimum amount estimated for the assignment of the portfolio will be confidential and that payment will have to be made in cash. BNDES is betting on the interest of companies specialized in increasing the recovery capacity of the securities.

In the last decade, according to the bank, the number of new securities of this type in its portfolio has fallen drastically, to only 15, as a result of measures that have reduced exposure to problematic transfer agents.

Original Story: Seu Dinheiro | Estadão Conteúdo
Photo: Photo by Doll91939 in Wikimedia Commons
Translation/Edition/Summary:Prime Yield

Whitestar closes purchase of a NPL portfolio to BCP

BCP bank has closed the sale of a NPL portfolio, called “Projeto Webb”, to the consortium Group Arrow/Christofferson, Robb & Company (CRC) confirmed Whitestar Asset Solutions, a company of the Arrow Group specialized in the management of credit portfolios (NPL) and real estate.

This is a more granular portfolio whose initial value was 450 million euros, but which has been adjusted to 270 million euros.

With this transaction, in addition to the purchase of the NPL portfolio from the Novo Banco, named “Carter”, announced in December, Whitestar Asset Solutions now manages over 9 billion euros in assets.

Novo Banco sold in December a portfolio of unproductive assets with a gross book value of 79 million euros for about 37 million. This was a portfolio made up of small secured and unsecured loans, i.e. it includes both collateral and non-collateralised loan contracts.

The “Carter” operation, unlike others over the past two years, does not include assets covered by the Contingent Capitalisation Facility under the Resolution Fund.

In all, in 2020 Whitestar won the management of four portfolios of NPLs (bad loans). After winning the management of two portfolios of NPLs sold by Santander (BST52 and 53), Whitestar confirms that in December, in two competitive processes, Arrow Global’s fund (sole shareholder of the company led in Portugal by João Bugalho) won the tender for the purchase of two portfolios of unproductive assets, in consortium with Christofferson, Robb & Company (CRC). The first portfolio, the Webb portfolio, originated by BCP, has a total of 270 million euros in debt, while Carter, originated from Novo Banco, has 92 million euros in debt.

The market for the sale of problem assets remains active. The Novo Banco, for example, is in the process of selling the “Wilkinson Project” portfolio, worth 200 million. Eco reported that Davidson Kempner, Atena Equity Partners (in consortium with Blantyre), and Bank of America Merrill Lynch moved into the second phase. The market expects the financial institution to launch a new portfolio in the market earlier this year.

BCP has yet to close the sale of the “Ellis” portfolio, having been chosen as the buyer, according to Eco, the management company Davidson Kempner. Initially, the “Ellis Project” had a value of 300 million euros, but with the withdrawal of some credits the value of the portfolio was reduced to about 170 million, Eco also advanced.

Original Story: O Jornal Económico | Maria Teixeira Alves
Photo: Millennium bcp website
Edition/Summary: Prime Yield