Open Banking can bring more than 4.6 million Brazilians into the credit market

Research by Serasa Experian shows that Open Banking has the potential to include an additional 4.6 million Brazilians in the credit market and inject R$ 760 billion into the economy. According to the company, the combination of its Data It with resources of artificial intelligence and machine learning (machine learning) can favour the inclusion and make more assertive access to credit.

The survey, based on 15,000 queries, points to a 49% increase in the estimated monthly payment capacity of the population, from R$ 929 to R$ 1,391. “With the combination of information, it is possible to obtain an even more accurate score and better measure the probability of a consumer becoming delinquent,” says head of Open Banking at Serasa Experian, Leonardo Enrique.

One of the main beneficiaries are younger people. For people under 25, the increase in the average payment capacity is 95.9%, from R$540 to R$1,057. Regions where informality is higher, such as the North and Northeast regions, also tend to benefit from Open Banking, with, respectively, an increase of 80% and 57.9% in the average payment capacity.

Women tend to benefit more than men in terms of average payment capacity. For them, the expansion is 54.8%, while for men, it is 48.1%.

he chief economist at Serasa Experian, Luiz Rabi, says that granting credit can help people settle basic debts, such as water and electricity, especially in a challenging economic scenario like the current one. “The greater the supply of credit concession, the more positive it is for the economy, as it encourages the population’s consumption to rise. Part of the GDP is related to family consumption, so more credit volume destined to individuals increases purchasing power, that is, this has an indirect impact on the country’s economic growth.”

Currently, in parallel, phases 3 and 4 of Open Banking are taking place. The third phase, which runs until September, is being marked by the initiation of payment transactions and forwarding of credit proposals. The other stage, which runs from December to May, allows the sharing of information on investment, pension, insurance and foreign exchange products.

Original Story: Gazeta do Povo | Vandré Karmer| 
Photo: Photo by Bruno Neves on FreeImages
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 Prime Yield

Caixabank has sufficient provision to withstand current uncertainty, CEO says

Spain’s Caixabank adequate provisions to face potential future losses given the current market uncertainty, the bank’s Chief Executive Officer Gonzalo Gortazar said.

“At the end of 2021, the unallocated amount of the pandemic-related provision is more than €1.4 billion, so we are comfortable with the existing cushion to absorb any losses that might happen,” Gortazar told shareholders during the bank’s annual meeting.

Caixabank’s pandemic-related provisions fell by around a fifth in 2021 compared to the previous year, boosting the lender’s recurrent net profit by more than 70%.

The Bank of Spain is monitoring the evolution of state-backed loans granted in the pandemic as repayment freezes are lifted and indirect impacts from the Ukraine war show up in credit portfolios.

The central bank’s Director General for Supervision Mercedes Olano said that she expected an increase in bad loans but that should be manageable as Spanish banks’ exposure to Russia was limited.

Gortazar told investors that Caixabank was confident that credit quality this year would remain at “very adequate” levels.

At the end of December, the bank’s non-performing loans (NPL) accounted for 3.6% of total lending, in line with the previous quarter.

Shareholders are expected to approve a gross cash dividend of 0.1463 euros per share against 2021 earnings, representing a 50% pay-out. 

Caixabank aims for a dividend cash pay-out policy of between 50-60% of 2022 consolidated earnings.Investors will also be asked to approve a reduction of the group’s outstanding share capital of up to 10%.

Original story: Reuters | Jesus Aguado 
Photo: CaixaBank website
Edition: Prime Yield

Inter signs agreement with Banco Mercantil for credit assignment operations

Brazilian lender Banco Inter said it signed an agreement with Banco Mercantil to carry out assignment of claims operations.

In a securities filing, the bank said the agreement comprises the execution of credit assignment operations with a total volume of up to R$2 billion in an 18-month period.

Original Story: Reuters | Staff
Photo: Inter Bank Facebook
Edition: Prime Yield

Greek state and Hellenic Bank Association to run joint e-platform on investment proposals

The Greek state and the Hellenic Bank Association will operate an e-platform to follow up on and evaluate investment plans, Alternate Finance Minister Theodoros Skylakakis said at the Delphi Economic Forum.

Skylakakis also said that any adjustments to the Recovery Fund due to changes in investment plan costs affected by the energy crisis and inflation will be limited.
The Recovery Fund was designed with conditions of crisis in mind, he added, therefore nearly half the plan is not affected by the current circumstances, while the rest will be subjected to small adjustments. As a result, the overall planning, purpose and works submitted will not be affected, while the categories in the Fund related to green transition and energy investments will be accelerated.

Original Story: Helenic News of America | News 
Photo: Photo by Jonte Remos on FreeImages
Edition: Prime Yield

More than 65 million Brazilians are in delinquency

Brazil recorded 65.2 million consumers in default in February, Serasa reported. This mark had not been reached since May 2020, at the beginning of the Covid-19 pandemic. These citizens have R$263.4 billion in negatived debts (in arrears).

In February alone, the number of defaulters rose 0.54%. Each Brazilian owes an average of R$4,042.08. The statistic is based on the fact that each Individual Taxpayer Registry (CPF) number has, on average, 3.4 active debts.

In relation to the profile of the defaulters, men represent 50.2% of the debtors, against 49.8% of women. In the age bracket, most are between 26 and 40 years old (35.3%), followed by 41 to 60 years old (34.9%).

The total number of consumers in default had been falling since April 2021, but has been rising steadily since October of last year. According to Serasa, the recent interest rate hikes, which make credit more expensive, and the still high unemployment are the main causes of the rise in delinquency.

The fall in the average income of the worker also affects the payment of debts. Even with the gradual recovery of the labour market in recent months, most people are finding jobs that pay less than the previous one, which increases the difficulty in paying off debts in arrears.

Among the types of defaulted debts in February, according to Serasa, 28.6% come from credit card debts. In second place are debts with household bills (water, electricity and gas), which account for 23.2%. In third place are spending on retail, which totalled 12.5%.

Original Story: Diário do Nordeste | Agência Brasil
Photo: Photo by Cesar Fermino on FreeImages
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Bison Bank becomes Portugal’s first institution to receive crypto licence

Portugal’s Bison Bank became the first authorized bank to get a crypto license from Portugal’s central bank.

Banco de Portugal, the country’s central bank, shared the announcement regarding the new move, revealing that Bison Bank will develop a new division for dealing with the crypto industry. This new, special business division will be known as the Bison Digital Assets.

Its purpose will be to operate as a virtual asset exchange. This will also make it the first entity in Portugal to be owned by an official bank, authorized by a central bank, and a division dealing with cryptocurrencies, offering custody and trading services.

On top of that, Bison Bank is also an institution that offers services such as wealth management, depositary and investment banking — available for individual and institutional clients alike — and more. The bank is actually owned by a Chinese private capital group based in Hong Kong.

Portugal’s central bank’s decision to grant the licenses to Bison Bank is not that surprising given that there were past activities and signals pointing toward Portugal warming up to crypto. For example, back in March of this year, the central bank granted the first full all-categories VASP license to a Portugal-based on-chain crypto payments firm, Ultrust. This was a piece of big news at the time.

Before that, in June 2021, Banco de Portugal also granted trading licenses to two digital currency exchanges — Mind The Coin and Criptoloja. The licenses allowed the platform to operate as VASPs. Finally, the central bank also granted an additional license to another platform called Luso Digital Asset.

All of this signaled that Portugal is slowly getting more and more comfortable with the idea of the crypto industry, and now that its first financial institution became a licensed crypto trading/custody service, it is only a matter of time before institutional investors of Portugal rush to enter the crypto industry through the bank. This will, in turn, attract other banks, and more crypto and retail investors, continuing to push adoption in Portugal.

Original Story: Securities.o | Ali Raza 
Photo:Photo by Lotus Head on FreeImages
Edition: Prime Yield

Bank of Spain urges lenders to monitor risks and keep provisions amid Ukraine conflict

The Bank of Spain told lenders to adequately monitor credit risks of some of their customers most exposed to the economic impact from Russia’s invasion of Ukraine and urged banks not to release provisions given the current uncertainty.

“In view of the new shock, we will have to closely monitor the effects of the crisis on institutions and their borrowers,” Bank of Spain Governor Pablo Hernandez de Cos said in the presentation of the central bank’s supervisory report.

He said lenders needed to maintain a high degree of prudence, with “appropriate and early recognition of the associated risks, in order to preserve confidence in the sector and to facilitate the continued flow of credit to the economy”.

Last April 5th, the central bank lowered its economic growth forecasts for 2022 and 2023.  

Deputy Governor Margarita Delgado warned in the report that “it is important that lenders…do not release provisions until uncertainties dissipate.”  

Spanish banks such as Santander and Sabadell have recently started to release provisions, mainly in the United States and Britain.

Although Spanish lenders have little exposure to Russian credit, estimated at just above €700 million by the central bank, they fear an indirect impact of high energy prices on some of their customers. 

Analysts have also warned that the conflict could delay interest rate hikes in the long run, and Delgado said it was “difficult to establish clear scenarios for the evolution of interest rates”.

She saw a more limited scope for further domestic mergers but growing chances of cross-border deals in Europe. The number of significant lenders in Spain has dropped to 10 from 55 before the 2008 financial crisis.

Despite a significant rise in property prices in 2021, De Cos did not see any evidence of a “clear overheating in the Spanish real estate sector”, but said the bank would closely monitor its performance. Spain’s property price index rose 6.4% in the fourth quarter, the biggest increase since early 2019.

Original story: Reuters | Jesus Aguado 
Photo: Bank of Spain website
Edition: Prime Yield

Bank of Greece launches e-platform for arrears settlements

The Bank of Greece will operate an online platform allowing for the digital submission of all loan settlement applications to banks and servicers, through the Code of Ethics on debt arrangement.

The central bank will attempt via this code to put in order the settlement procedures, mainly by debt management companies that have received a significant portion of the private arrears. This way it will introduce standardized procedures that can will monitor closely, along with examining complaints submitted by debtors.

That should put an end to the problems reported in the efforts to have debts settled between debtors and creditors, leading to imperfect arrangements and delays in the process to find an agreed solution. On several occasions debtors submit proposals based on their repayment ability as their disposable income points to, and not based on the property assets they own because they do not know (and no one explains to them) that the minimum tranche is determined by the value of the properties their loans are secured against.

Sources add that filling a Code of Ethics application is fairly complicated, requiring multiple documents and data from authorities.

Original story: Ekathimerini | Evgenia Tzortzi 
Photo: Big Stock Photo
Edition: Prime Yield

Spain’s state rescue fund FROB surpasses 50% stake in bad bank Sareb

Spain’s state rescue fund FROB has increased its stake in the country’s “bad bank” Sareb to more than 50%, in line with a European Union order to count its liabilities as public debt.

FROB said it had bought a 4.24% stake in Sareb, set up in 2012 to take on bad loans after the financial crisis, to raise its holding to 50.14%. No price was given but several sources with knowledge of the matter said it was merely symbolic.

The move comes after the government in January approved a legal framework allowing FROB to surpass the 50% threshold in Sareb following the EU order.

FROB didn’t say which banks had sold their stakes but a source at Sareb said some smaller holders, such as Bankinter, had tendered their stakes. Bankinter declined comment.

Santander remains the biggest private shareholder with a 22.2% stake, followed by Caixabank with 12.2%.

Several Spanish banks have been planning to sell their stakes in Sareb, which has struggled since its creation as a slump in real estate prices has depressed the value of loans and assets, but most had retained their holdings for tax reasons.

After selling 17.1 billion euros of all debt issued, Sareb still holds 33.7 billion euros in senior debt.

Original story: Reuters | Jesús Aguado 
Photo: Sareb Linked IN
Edition: Prime Yield

Piraeus Bank buys out Iolcus investment firm

Piraeus Bank, Greece’s fourth largest lender by market value, agreed to fully acquire investment firm Iolcus for about €10 million to boost its fee-generating pools.

Set up in 2011, Iolcus manages the Apolis alternative investment funds and portfolios for private and institutional investors and has €1.0 billion in assets under management.

“The transaction will further diversify our fee revenue pools and deepen our know-how around the expanding asset management business in Greece,” Piraeus CEO Christos Megalou said.

Grant Thornton advised Piraeus Bank on the deal.

Original Story: Reuters | George Georgiopoulos
Photo: Piraeus Bank website
Edition: Prime Yield

Brazilian’s indebtedness hits a 12 year high

Almost 8 out of 10 families in Brazil are in debt, whether they are in arrears or not. This is the highest proportion of indebted since the beginning of the Survey of Consumer Indebtedness and Delinquency (Peic), in 2010, according to the National Confederation of Trade of Goods, Services and Tourism (CNC).

The current rate of indebted families is 77.5%. In February, the percentage was 76.6%. In March last year, the rate was 67.3%, according to Peic.

According to the analysis, these figures point to the trend of increasing indebtedness, even though market interest rates are higher and make credit more expensive. According to recent data from the Central Bank (Bacen), average interest rates in credit lines with free resources to individuals increased from 39.4% in January 2021 to 46.3% in January 2022.

In a statement, the president of the CNC, José Roberto Tadros, says that the result of the survey reflects the pressure of inflation on budgets, even in the face of the increase in the basic interest rate, which would have the role of reducing the demand for credit. “This high, persistent and disseminated inflation keeps the need for credit high to recompose income, causing families to find third-party resources as a way to maintain their level of consumption,” he notes.

Original Story: Infomoney | Mariana Amaro
Photo: Photo by Afonso Lima on FreeImages
Translation and Edition: Prime Yield 

2/3 home owners will only pay mortgage off after 70

Almost two-thirds of people with mortgages in Portugal will only finish paying for their house after they reach the age of 70.

“Given the aging of the Portuguese population and the significant reduction in the income of borrowers in the transition from working life to a retirement situation, despite the reduction in expenses that may occur, the high concentration of loans in borrowers over 70 years of age in the term of the loan could pose a risk to the financial system,” says the BdP in the report.

According to the regulator, at the end of 2021, “almost two-thirds of the housing loan stock was associated with borrowers whose age at the end of the loan will be over 70 years and around a quarter was associated with borrowers whose age will be over 75 years”.

“Most of these borrowers took out their loans between 27 and 40 years of age”, the document also reads.

For the BdP, the granting of loans with very long maturities means that, very often, “the term of the loans exceeds the active life of the borrowers”.

Original Story: The Portugal News |TPN 
Photo: Big Stock Photo
Edition: Prime Yield

Greek banks get busy with asset quality cleanup

Greek banks are well positioned to deal with any new bad loans that develop this year, after significantly improving their asset quality in 2021, rating agencies say.

Greece’s aggregate non-performing loan (NPL) ratio fell to 18.65% in the third quarter of 2021, the latest period for which data is available, according to the European Central Bank. This is down from 32.92% in the third quarter of 2020, and much nearer to the ratios for other Southern European economies such as Cyprus and Portugal. Greece’s NPL coverage ratio rose on a yearly basis to 47.45% in the third quarter of 2021, from 45.04% a year before.

Any increase in new non-performing exposure, or NPE, inflows should be manageable for the big Greek banks and cost of risk should fall, DBRS Morningside Vice President Andrea Costanzo wrote in a March 23 note. NPEs include “unlikely to pay” loans in addition to loans of more than 90 days past due.

Less risky balance sheets and better internal capital generation should support banks’ capitalization, Costanzo said.

Piraeus Bank SA, Alpha Services and Holdings SA, National Bank of Greece SA and Eurobank Ergasias Services and Holdings SA are set to reduce NPEs and loan loss provisions in 2022, and to keep a tight grip on costs, S&P Global Ratings said in a March 28 report. This will probably allow NBG and Eurobank to reinstate dividends from 2022 earnings, and Alpha could follow a year later, Ratings said.

The four banks’ long-term deposit ratings were upgraded by rating agency Moody’s on March 30, driven by better asset quality and improved operating conditions, among other factors. The banks are likely to further improve their credit profiles over the next 12 to 18 months and are well positioned to tackle any new bad loans.

The war in Ukraine could indirectly slow the Greek banking sector’s recovery through inflation, less tourism spending and greater investor risk aversion, Ratings said.

Falling NPL ratios

Alpha and Piraeus sharply reduced their problem loans as a proportion of gross customer loans between the fourth quarter of 2020 and the final quarter of 2021, according to S&P Global Market Intelligence data. Alpha’s declined to 6.15% from 30.15%, while Piraeus’ dropped to 8.47% from 34.51%.

lpha Bank completed €16 billion of disposals and securitizations of nonperforming exposures in 2021, and began ramping up domestic lending significantly in the final quarter, following a decade of deleveraging, the bank said.

Piraeus’ sale of NPLs through securitization also helped bring down the sector’s bad loan stock. Both Alpha and Piraeus made use of the government-backed Hellenic Asset Protection Scheme, or HAPS.

The NPL clean-up led to a €2.9 billion loss at Alpha in 2021, compared to profit of €104.0 million in 2020. The accelerated de-risking also put pressure on Piraeus’ net interest income, which fell to €318 million in the fourth quarter of 2021, from €1.49 billion a year before.

Alpha Bank told Market Intelligence that it aims to reduce its NPE ratio to 7% at the end of 2022, from 13% at the end of 2021. Eurobank said it expects to cut its NPE ratio to 5.8% in 2023, from 6.8% in 2021.

Piraeus Bank and National Bank of Greece did not respond to a request for comment.

European banks still face risks amid the phaseout of state pandemic-related measures and Russia’s invasion of Ukraine, which could place pressure on asset quality, Bank of Greece Governor Yannis Stournaras said in a March 22 speech.

Original story: S&P Market Intelligence Global  News | Rhema Penaflor, Marrissa Ramos 
Photo: Website Bank of Greece
Edition: Prime Yield

NPL ratio within the Portuguese banks retreats to 3.6% by the end of 2021

The non-performing loan (NPL) ratio within the Portuguese banking sector decreased to 3.6% at the end of 2021, 0.4 percentage points less than in September and 1.3 percentage points below 2020, the BdP said.

According to the latest report from the Bank of Portugal (BdP) on the Portuguese banking system for the fourth quarter of 2021, the gross NPL ratio decreased 0.4 percentage points from the previous quarter to 3.6 percent, reflecting the decrease in NPLs and the increase in productive loans, with contributions of -0.3 percentage points and -0.1 percentage points, respectively. The NPL ratio net of impairments stood at 1.7% (1.8% in September 2021).

Data released by the BdP indicate that the gross value of NPL owned by Portuguese banks fell by €1.012 billion between September and December 2021, standing at €12.032 billion at the end of last year. In year-on-year terms, the decrease in the value of NPL was €2.384 billion.

Net of impairments, NPL totalled €5.747 billion at the end of 2021, down from €5.775 billion in September and €6.494 billion year-on-year. According to the BdP, the gross NPL ratios of companies (non-financial corporations – NFCs) and individuals stood at 8.1% (-0.3 percentage points) and 2.8% (-0.2 percentage points), respectively, with their variation “reflecting, in particular, the reduction in NPLs”.

The NPL coverage ratio by impairments decreased 3.5 percentage points in relation to the previous quarter, to 52.2%, reflecting “the decrease in accumulated impairments, partially offset by the reduction in NPLs”.

In companies there was a decrease of 3.8 percentage points, to 52.9%, while in individuals the coverage ratio fell to 50.9%, with an increase of 0.3 percentage points in consumption and other purposes, to 64.8%, and a decrease of 1.5 percentage points in the housing segment, to 32.6%.

Original story: ECO| Lusa 
Photo: Photo by Svilen Milev on FreeImages
Translation and Edition: Prime Yield

Banks are monitoring 50,000 million ICO loans for fear of non-payment

The Spanish banks are monitoring about €50 billion in loans guaranteed by the Official Credit Institute (ICO) granted to companies from problematic sectors, for fear of non-payment. This is the equivalent to one out of every two euros lent by the sector with the public guarantee, according to data handled by the consultancy firm Axis Corporate.

The firm points out that 50% of the total financing provided with ICO guarantees is concentrated in five economic sectors that, by their nature, “have been significantly affected by the pandemic”. 

Specifically, of the €50 billion, €14.8 billion come from the tourism, leisure and culture sector, €10.7 billion from the construction and infrastructure area, €8.8 billion from business and professional services, €8.2 billion from capital and industrial goods and €7.6 billion from food and beverage distribution.

The data compiled by Axis Corporate warns that part of these credits “are deteriorating quite rapidly”. Thus, it points out that in the sectors most affected by the pandemic there has been an increase in the rate of doubtful credit of 30% compared to the previous half-year (with data to half of 2021) and expects this growth to continue to increase in the coming months, which would explain why the Bank of Spain has been reluctant to financial institutions to release provisions.

In addition, Axis Corporate has found that more than 40% of the companies that have requested ICO guarantees to meet their obligations required changes of term and/or grace period, as they were unable to comply with them, and the payment time in the private sector “has grown significantly” throughout 2021, to stand at over 90 days.

“Although this delay in payment has become commonplace in our economy, 27% of companies see the viability of their business compromised if payment delays become structural. Another particularly worrying figure is found in the ratio of non-payment of invoices, which has risen from 3.1% in 2019 to 5.4% in 2020 and 4.8% in 2021, which, if not corrected, would mean an increase in the non-fulfilment of companies’ financial obligations”, the consultancy firm warned.

Axis warns that this situation is aggravated by the current economic situation, with inflation soaring, energy costs at record highs and the war in Ukraine.

Although the government is planning to make available to the most affected sectors another line of guarantees amounting to €10 billion of the €36 billion still available from the line of guarantees of the coronavirus, as well as extending the maturity of loans guaranteed by the ICO and the grace period for the most affected sectors, the firm argues that, “if there are no drastic changes in the economic environment, these measures may only succeed in delaying beyond the second quarter of 2022 the massive influx of defaults”.

Original story: Europa Press| Europa Press | 
Photo:Photo by Pablo Rodríguez on FreeImages
Translation and edition: Prime Yield

BTG Pactual to buy controlling stake in Banco Economico

Brazilian investment bank Banco BTG Pactual SA announced it has agreed to acquire a controlling stake in bankrupted lender Banco Economico.

The move is part of BTG’s “special situations” strategy, which is focused on turnarounds by acquiring and recovering non-performing loans and alternative financial assets, it said in a securities filing.

Original Story: Reuters | Staff
Photo: BTG Pactual website
Edition: Prime Yield