The banks are facing a scenario of high interest rates in Spain with limited defaults, thanks to a good response from customers who are paying their debts and the transfer of the riskiest loans to non-regulated financial institutions. They sell them at a discount, but in return they get rid of some uncertainty and keep their balance sheet in check.
Last year, €17.7 billion worth of non-performing loans (NPLs) were sold in Spain, according to a report published today by Axis Corporate. The activity has been revived amid rising interest rates.
Of this amount, €8.2 billion was raised by traditional banks. There were two major transactions outside this regulated circuit: the sale of a €6 billion portfolio by the Norwegian multinational specialising in debt collection, Axactor, and the sale of a €2 billion portfolio owned by Blackstone and transferred to Cerberus.
Sareb, Santander and BBVA, among the most active
Within the regulated entities, Sareb – owned by the State through the Frob and several banks – sold NPLs to Axactor for 3 billion, integrated in a portfolio of NPLs called Victoria.
Other portfolio sales were carried out by Deutsche Bank to Cerberus for €1.6 billion and by Santander to several firms in four transactions for €1,707 million.
BBVA made three divestments for €830 million. These were, on the one hand, the Artemis portfolio, transferred to KKR, and, on the other, the Nairobi portfolio, which went to Cerberus and Kruk.
CaixaBank made two transactions valued at €645 million, one with Link and the other with Kruk, to divest a portfolio called Twister. Goldman Sachs sold a 350 million portfolio in Spain to Bank of America.
What is the distressed debt firm, as this type of company dedicated to problem assets is known, that has bought the most doubtful portfolios from banks? It is the US fund Cerberus, which has acquired portfolios valued at €4.51 billion.
Part of the result of all these movements is the low NPL ratio exhibited by Spanish banks. Santander, BBVA and Sabadell report ratios of between 3% and 3.5%, while CaixaBank, which is the most popular among retail customers in Spain, puts it below at 2.7%.
There are two banks in Spain, Ibercaja and Kutxabank, which have managed to bring their NPL ratio below 2%. The former stands at 1.6% and the latter at 1.2%.
Doubtful loans on banks’ balance sheets have fallen in Spain from 3.7% in 2022 to 2.75% in the second quarter of 2023, despite rate hikes and the fact that the unemployment rate is still the highest in Europe.
Original Story: La Vanguardia | Author: Iñaki de las Heras
Edition and translation: Prime Yield