BCP has already disposed of the Corporate Restructuring Fund, with banking exposures to Cabelte and the CCM group. Caixa and Montepio have hired PwC and Baker Tilly to sell their positions.
The banks are selling yet another restructuring fund, and this after the millionaire deal with ECS luxury hotels at the end of last year. In the last few days of June, BCP closed the sale of its position in the Corporate Restructuring Fund, valued at around €20 million. ECO knows that Caixa Geral de Depósitos (CGD) and Banco Montepio hired PwC and Baker Tilly to organise a process to sell their units in this fund, which manages the banks’ exposure to electrical cable manufacturer Cabelte and ceramics group CCM.
ECO contacted the banks, but only Caixa confirmed that “it is carrying out an organised process to sell the Corporate Restructuring Fund”. BCP, which announced the sale in its first half report and accounts, declined to comment on the operation, namely whether it had sold its units to Oxy Capital, which is the fund’s management company, as two market sources told ECO. Novobanco – which has also sold its position – and Banco Montepio declined to comment.
In recent years, Portuguese banks have made a dramatic effort to reduce non-performing loans, including recoveries, cures and the sale of large portfolios. But now, with NPL (non-performing loans) ratios at historic lows and below the “magic number” of 5%, banks are turning to restructuring funds to continue cleaning up their balance sheets.
At the end of last year, they sealed the sale of the ECS restructuring funds, a portfolio of luxury hotels and golf courses, in what became known as the property deal of 2022, made for around €800 million with the American fund Davidson Kempner. They also tried to sell Discovery, another fund with tourism assets, but the process didn’t have a positive outcome.
This time, they are selling the Corporate Restructuring Fund, which is valued at around €70 million on the balance sheets of the four banks. Novobanco has the largest exposure, valued at 30 million, followed by BCP. The positions of the public bank and Banco Montepio are valued at 14 million and 4 million, respectively, and the organised process to sell these two holdings should be launched on the market next month.
This fund is managed by Oxy Capital, led by Miguel Lucas, and manages the exposures of these four banks to just two companies: Cabelte, which made €190 million last year and has liabilities of 84 million, and the Carlos Cardoso Mota group – the holding company had liabilities of 77.3 million in 2021.
Contacted by ECO, Oxy Capital had not replied by the time this article was published.
Bank disposed of a billion last year
These restructuring funds were created with the aim of taking over the management of property assets and other corporate exposures that ended up in the hands of the banks over the past decade due to debtor difficulties.
By handing over the problem assets to a specialised fund in exchange for units, the banks shared the risk between themselves. However, these exposures weigh heavily on risk-weighted assets and consume the banks’ capital, which is why they have long wanted to sell. In fact, the European Central Bank (ECB) has been pressurising them to get rid of these assets.
That’s what they’ve been doing. In 2022, BCP, Novobanco and Caixa reduced their exposure to these restructuring funds by around €1 billion, a decrease that is mainly explained by the ECS deal.
Despite this, these three banks still had exposure valued at more than €750 million, namely to the Discovery Portugal Real Estate Fund (400 million) and the Aquarius Real Estate Fund (250 million).
Original Story: Eco |Alberto Teixeira
Photo: Banco Montepio website
Edition and translation: Prime Yield