Spanish banks slightly tightened the criteria for granting loans in the last months of 2021 and this trend seems to have continued at the start of the 2022 financial year, at least for companies, as credit to companies fell by 0.8% month-on-month in January, with 7,669 million euros less.

However, credit granted by financial institutions to companies rose by 1.05% year-on-year, to 931,989 million euros, adding 9,698 million euros as a result of the injection of liquidity measures approved by the government since the start of the pandemic, such as the 140,000 million ICO guarantees to deal with the impact of Covid-19.

Likewise, financing to households and non-profit institutions resident in Spain rose by 1% in January to 700,769 million euros, adding 6,933 million euros in a single year, and managed to hold steady at the start of the year, with just 778 million up (+0.1%) on December, according to data published on Tuesday by the Bank of Spain.

All this after the 2021 financial year closed 2021 with six-year highs in financing to companies (939,658 million euros), while it rose to families per omicron to around 700,000 million euros.

Maintenance of conditions in the first quarter

In the fourth quarter of 2021, the criteria for granting loans would have tightened slightly in Spain across the board, according to the latest bank lending survey of the supervisory body, and the data show that this trend would have continued at the start of 2022, especially for companies.

Banks do not want to make the mistakes of the past and have been gradually tightening the criteria for granting financing, especially in the retail and non-residential real estate sectors, although they have not turned off the tap in these areas, as credit continues to flow but loans are subject to stricter conditions as a precautionary measure to control default.

Looking ahead to the first quarter of 2022, the Spanish institutions surveyed do not expect significant changes in the supply of credit, so they anticipate that lending criteria will remain stable and that demand will grow, albeit at a “very moderate” rate.

Consumer credit falls and mortgages rise

The slight upturn in household credit is due to the increase in mortgage loans, which amounted to 514,738 million euros in January, up 76 million on a monthly basis and 5,289 million on a year-on-year basis (+1). Even so, mortgage credit still represents 73.45% of the total.

Household consumer loans fell by 3.4% month-on-month, with 3,229 million less, to 92,010 million euros, but on a year-on-year basis they rose by 0.5%. This monthly decline may be influenced by the increase in the savings rate, which reached record highs last year, and the pent-up demand that could gradually be uncorked in the coming months. There was also an increase in lending for “other purposes” to 91.237 billion from 87.324 billion in December.

On the other hand, on financing to companies, which leaves behind the maximum levels since 2015 that it had registered months earlier, the decline in loans from credit institutions to companies stands out, as they fell in a single month by 8,288 million euros (-1.7%), to 479,147 million euros, with a year-on-year decrease of 1.2%, as 5,803 million euros less were granted.Debt securities rose 11.2% year-on-year and 0.4% month-on-month to 143.142 billion euros. At the end of the first month of the year, foreign loans had grown by 0.3% year-on-year and were practically unchanged from December, with a total of 309,701 million euros.

Original Story: Economia digital| Sérgio Diago 
Photo: Photo by Pierre Amerlynck from FreeImages.com
Translation & Edition: Prime Yield

Spanish banks have taken off their balance sheets some 128 billion euros in bad loans related to real estate since January 2015, according to the consultancy firm Debtwire. They have some €47 billion left, 27% of what they accumulated six years ago. The default rate in this period has plummeted from 12.5% to 4.3%, according to the Bank of Spain.

The managers of Spanish financial institutions set themselves the great mission of eliminating toxic assets from their balance sheets. The amount stood at around €175 billion seven years ago, so they still hold 27%. This figure does not include the €51 billion, including loans and real estate, that Spain’s bad bank Sareb absorbed from the banks that received aid between 2012 and 2013.

Amongst the latest largest portfolios put for sale, there are those from Santander, BBVA and CaixaBank; accounting for a nominal amount of around €3,500 million. A common formula used by financial institutions to reduce non-performing assets is to transfer them to so-called servicers, specialised in this task. Haya Real Estate (controlled by Cerberus), Solvia (Intrum), Altamira (doValue), Servihabitat (Lone Star), Aliseda (Blackstone) and the Spanish firm Hipoges stand out among these companies.

But there have also been sales of NPL portfolios, and of pure and simple bricks and mortar assets , in bilateral transactions, with large institutional investors acquiring these assets with price discounts of up to 90% off its nominal value in the most extreme cases. Institutions prefer to pocket a small amount of these loans as long as they do not allocate resources to their collection.In the best cases, they can even release provisions that they had been setting aside, which are directly recorded in the profit and loss account. The NPL ratio has plummeted to one third of the level at the end of 2014 thanks to the measures taken. But even so, the ratio is more than double the 2.1% recorded on average in the sector in Europe.

Original Story: Cinco Dias | Pablo Martín Símon / Ricardo Sobrino 
Photo: Photo by Svilen Milev in FreeImages.com
Translation and Edition: Prime Yield

Spanish banks are keeping the nonperforming loans (NPL) ratio of their loan portfolio stable and are facing the first quarter of the year with a positive outlook. Specifically, the NPL ratio for loans granted by banks ended 2021 at 4.29%. The NPL ratio has not been at such a low level since the end of 2008, when it ended at 3.37%. On a monthly basis, this is the lowest NPL ratio since March 2009, when it stood at 4.26%.

According to data published by the Bank of Spain, the outstanding loan portfolio at the end of December totalled 1,223 trillion euros, as total credit in the sector fell by 0.06%, slightly down from 1,227 trillion the previous month, and the total volume of doubtful loans fell by 4.77% to 52,531 million euros, some 60 million less. Compared with the end of 2020, the NPL ratio fell from 4.51% at that time to 4.29% in December 2021 and the balance of NPL fell by more than 2.6 billion euros.

The NPL ratio of banks, savings banks and cooperatives fell in December, from 4.22% in November to 4.21% at the end of 2021, also its lowest level since March 2009. The December rate was unchanged from a month earlier, with a 0.27% decline in the sector’s total lending and a 0.11% drop in the balance of non-performing loans in the last month of the year. This fall in deposit institutions’ NPL occurred despite the fact that the loan portfolio fell slightly, to 1.173 trillion, thanks to the fact that the balance of defaults did so to a greater extent, to 49,361 million.

Meanwhile, the NPL ratio of financial credit institutions stood at 6.89% at the end of 2021, its highest level since August 2020, with NPLs at 2.948 billion, up from 2.737 billion in November, and a loan portfolio that grew to 42.783 billion, up 38 basis points on the year and 33 basis points from the previous month.

With regard to the provisions of credit institutions – the so-called capital buffer with which institutions face possible impairment or insolvency – these broke in December with three consecutive months of decline and rose to 38,504 million at the close of the 2021 financial year, a decrease of 1,339 million (-3.36%) compared with a year earlier, but an increase of 227 million (+0.59%) compared with November. Provisions for deposit institutions as a whole stood at 36,083 million in December, down 1,214 million in the year (-3.25%) but up 250 million in the month (+0.7%).

The figures offered by the Bank of Spain include the methodological change in the classification of Financial Credit Establishments (EFC), which since January 2014 are no longer considered within the category of credit institutions. Excluding the change, the NPL ratio would stand at 4.4%, since the credit balance was 1.191 trillion euros in December, excluding the credit of the EFCs.

Original Story: La Razon |Javier de Antonio
Photo: Photo by Victor Iglesias from FreeImages.com
Translation & Edition: Prime Yield

Radical change in Sareb’s partners. Spain’s Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (SAREB) has chosen KKR (through its Spanish company Hipoges) and the Blackstone fund (through its asset managers Aliseda/Anticipa) as the new servicers that will manage its €25.3 billion mega-portfolio of real estate assets and loans.

In this way, the bad bank leaves out its traditional partners after calling a tender with which it sought to save costs. Haya (Cerberus fund), Altamira (doValue) and Solvia (Intrum) have lost this mega-contract. In addition, Servihabitat (Lone Star) had already dropped out of the first part of the tender by submitting the most expensive bid.

In the coming weeks, Sareb will finalise the portfolios to be managed by each of the two winners. As of 1 July, they will take over from the outgoing managers. The portfolios comprise 13,300 million in unpaid developer loans and 12,000 million in residential real estate, land and tertiary assets, all of which are toxic assets from the banks during the brick crisis.

On the decision to choose the new servicers, the proprietary directors who represent the financial institutions on the board of directors have not been involved in the voting, according to sources close to the process, and have left the approval in the hands of the chairman Javier García del Río, the independent directors and those of the FROB (dependent on the Ministry of Economy).

The main objective in calling the tender is to reduce the annual bill it pays to the servicers for the management of its portfolio, which has an annual cost of around 160 million. The entity calculates that with the proposals from Hipoges and Aliseda/Anticipa it saves around 20% compared to the contracts signed in 2014 and 10% compared to the one signed with Haya in 2019.

The financial institution has decided to reduce the number of fund managers to two in order to, in exchange for reducing the margins paid, give a greater volume of business to the winners.

The contenders in this tender had to first submit an economic offer, after which Sareb rejected Servihabitat, and a technical offer. The institution chaired by Del Río considers that Hipoges has enormous professional capacity, with the greatest diversification of clients in the country. Of Anticipa/Aliseda (Blackstone companies that have presented themselves jointly), it values their robust capacity to manage large portfolios. “Both have first-class technological platforms to provide an optimal service to Sareb”, according to Sareb.

It is now a complicated process for the losers of the tender, since, given the size of the portfolio under management, Sareb is one of the largest clients in terms of volume for all of them. The project has been supervised by an independent auditor, Mazars, which has validated the integrity and good execution of the process, according to Sareb.

A closing phase is now underway with the two selected bidders. In the event of any setback in the final negotiation, Sareb’s board could decide to move forward with the next candidates in the order of scoring, as all bids have been considered valid.

The bad bank also has other partners for different tasks. In the case of urban development, it has Servihabitat, through its subsidiary Serviland, as manager. For the completion of stalled works, it partnered with Domo, and in the case of residential development, it launched the developer Árqura, managed by the real estate company Aelca (of the Värde Partners fund).

“We are very pleased to have been chosen by Sareb as one of the companies that will manage its portfolio of more than 25 billion euros of real estate assets and loans. It is a great challenge for Aliseda and Anticipa”, say these Blackstone companies, whose CEO is Eduard Mendiluce.

Original Story: Cinco Dias |Alfonso Ruiz
Photo: Sareb website
Translation & Edition: Prime Yield