Novobanco has a €20 million debt from a single name up for sale on the market. In addition, Banco CTT, BPI, BCP, Montepio and Santander have non-performing loan (NPL) portfolios for sale. The NPL market is buzzing again.
The banks have not yet seen a deterioration in the quality of their loan portfolios despite the rise in interest rates, but they are no less active in selling NPL portfolios.
According to Jornal Económico, Novobanco has sold a loan (single name) worth €20 million euros. The loan is known in the market as “Schmidt”, probably referring to the name of the debtor.
But it’s not the only bank selling NPLs.
Banco CTT’s “Boavista Project” (more specifically, 321 Credit), worth €109 million, is in the binding offer phase.
Banco Montepio’s “Zêzere Project”, with a book value of €120 million, is also in the binding offer phase and is being advised by KPMG.
The portfolio consists of two tranches. One of €62 million of NPL without real guarantees (unsecured) and another secured tranche (with guarantees) totalling €57 million.
Three candidates have already been selected to proceed to the binding proposal phase of the “Zêzere Project”, the name given to the portfolio of non-performing loans (NPLs) that Banco Montepio has put up for sale. As reported by JE, LX Partners, Fortress, CRC and LCM Partners have been selected to submit binding offers. The deadline for submitting binding offers is 7 June. Regarding this tender, market sources are outraged that Hipoges is in the running with Fortress for Montepio’s portfolio, while at the same time “managing the portfolio for the bank”. This “gives them a competitive advantage over other bidders”, they say.
Montepio’s non-performing loan portfolio consists of 120 individual debtors and a further 150 loans to small and medium-sized enterprises (SMEs), secured by property worth 80 million.
The unsecured part consists of SME loans, 60% of which are in a very difficult situation.
The portfolio offered for sale by BPI is also in the binding offer phase. Bidders will submit their offers on Tuesday 28th. The “Copper Project” is a mixed NPL portfolio worth €85 million, of which €62 million is unsecured NPL and €12 million is secured credit. The portfolio also has €11 million of loans from large debtors (single names).
Santander Totta’s bad debt portfolios also have a deadline for submitting binding proposals on 28 May. The bank launched two portfolios, Pool 62 and Pool 63. The first portfolio has a value of €70 million and is made up of unsecured loans. Pool 63 has a value of €30 million and is made up of NPL with guarantees (secured).
The process of selling the largest NPL portfolio on the market is further behind schedule. BCP received non-binding offers for its “Spring Project” worth €264 million last Thursday, 23 May. This portfolio is made up of NPL from large debtors.
In total, the six banks have €695 million worth of impaired loans on the market.
As an Alvarez & Marsal analysis of the Portuguese banking sector revealed, despite the increase in the cost of risk between 2022 and 2023, “the quality of the credit portfolios remained robust with improvements in the NPL and coverage ratios”.
Portuguese banks exceed the EU average of 1.8 per cent in NPL ratio, but their coverage level more than doubles the EU average of 42.9 per cent.
The NPL ratio fell from 3.18 per cent to 2.59 per cent at the end of last year, with the improvement driven by a 16 per cent reduction in problem loans. Coverage by impairments and collateral exceeds 100 per cent, which shows an even more conservative approach than in 2022.
Original Story: Jornal Económico | Author: Maria Alves
Edition and translation: Prime Yield