NPL&REO News

CaixaBank resumes the sale of 576 million in mortgages that was halted by covid

After the Louvre and Hermitage projects launched in 2020, the Catalan entity has launched the MoMA Project, with which it hopes to sell to opportunistic funds delinquent mortgages valued at 576 million, according to financial sources consulted by El Confidencial newspaper.

The second-largest Spanish group did not comment. These are doubtful mortgages (with more than 90 days of non-payment) that it had already tried to sell before covid-19 was extended, within another larger portfolio known as Tackle, according to the sources consulted.

Although they are pre-Bankia assets, this is the first operation that CaixaBank has put on the market since it absorbed the nationalised entity. The merger has increased the group’s non-performing loans from 8.7 billion to 14.1 billion and net real estate assets (discounting provisions) from 1.1 billion to 2.5 billion. In gross terms, this would be around 4.3 billion. Thus, the group chaired by Goirigolzarri has problematic assets valued at 18.4 billion on its balance sheet, which it needs to lighten before the default derived from the current pandemic crisis picks up.

Even so, the pressure from the European Central Bank (ECB) for all banks to get rid of toxic assets is at its maximum. CaixaBank has therefore decided to speed up this MoMA operation and could be preparing others to close before the end of the year.

This operation covers 5,700 credits from 3,700 creditors who initially requested 576 million, according to information distributed by KPMG to investors. The unpaid amount stands at 495 million. The portfolio is secured by 4,500 properties, which are mainly located in Madrid, Barcelona and Seville, and have a valuation according to the Big Four of 775 million, well above the value of the credits.

Singular Assets
The transaction includes some higher quality assets – properties worth more than one million euros – in locations such as Mallorca, Boadilla del Monte, Pozuelo de Alarcón, Costa Brava, Xàtiva and Barcelona. This operation represents a new litmus test for the sector, after a standstill in the sale of unpaid mortgages caused by operations carried out by Sabadell in 2020, according to the sources consulted. Thus, this entity lowered prices to a level that made it difficult for other banks to go on the market, due to the impact it could have on provisions.

Original Story: El Economista | J. Zuloaga
Photo: CaixaBank website
Translation & Edition: Prime Yield

Piraeus announces the sale of Sunrise I portfolio of Non-Performing Exposures amounting to €7.2bn Gross Book Value

Piraeus Financial Holdings S.A. (“Piraeus”) announced to have reached definitive agreements with Intrum AB (publ) and Serengeti Asset Management LP for the sale of 49% and 2% of the mezzanine and junior notes of the Sunrise I NPE portfolio respectively.

The Sunrise I portfolio consists of retail and corporate NPEs. It comprises c.205k loan exposures and a gross book value of €7.2bn, as at 30.09.2020. 

The implied valuation for the Transaction, based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes, corresponds to 34.5% of gross book value. 

The transaction is part of the wider Sunrise transformation programme Piraeus announced on 16 March 2021 and underlines the rapid progress in Piraeus’ c.€19bn NPE clean-up plan, leading to a single-digit NPE ratio within less than 12 months. 

Piraeus Bank has already filed an application for the inclusion of the Sunrise I senior notes in the Hellenic Asset Protection Scheme (the “Hercules” scheme). The application relates to the provision of a guarantee by the Greek State on the senior notes of c.€2.45bn.

The Transaction will be classified as held for sale in Q2.2021. Together with Phoenix and Vega NPE transactions that are also pending completion this quarter, the Piraeus NPE ratio will radically drop to c.23% from the reported 46% of March 2021. Subject to the required approvals, the loans within the Sunrise I securitization perimeter are expected to be derecognized from Piraeus Financial Holdings consolidated statement of financial position within H2.2021.

The expected capital impact of the Transaction stands at c.2.7 percentage points over the December 2020 total capital ratio, taking into account the P&L effect and the RWAs relief of the Transaction.

Original Story: Piraeus Site
Photo: Piraeus Bank
Edition: Prime Yield

Santander prepares to sell a portfolio of 1,500 million assets

The Spanish bank is negotiating two sales transactions to Cppib and Cerberus without a competitive process to clean up its properties in Spain.

The bank chaired by Ana Botín is negotiating two sales of troubled assets worth €1.5 billion with the Cppib and Cerberus funds, according to El Confidencial. The bank is negotiating both through a non-competitive process, without giving other investors the option to compete with the funds. These two processes are in addition to a portfolio that the bank already has on the market: the EUR 600 million Talos Project, for which it has received offers from Fortress, Marathon and Tilden Park. In total, Santander has begun the sale of assets worth more than EUR 2,000 million. Through these operations, the bank seeks to reduce its non-performing loans, which are among the highest in the country since the purchase of Popular. The operation underway with Cppib, a Canadian pension fund, covers the mortgages it ruled out buying until 2020, when it reached an agreement with Santander. The fund entered the Spanish market three years ago with the purchase of non-performing loans. On the part of Cerberus, the negotiation would cover unpaid credits worth 500 million euros. Santander has started selling assets worth more than 2,000 million euros.

According to a study by Prime Yield, the sale of bad loans by banks will soar in 2021 and could exceed 7,100 million euros, continuing with the strategy initiated last year by which between the second and third quarters they reduced the stock of NPLs (Non Performing Loans) by 2,400 million euros. Up to March, 700 million euros were transacted. Despite the banks’ efforts to get rid of the product, Spain continues to be the third country in the European Union with the most NPLs. Leading the way is France, with 125.4 billion NPLs, accounting for 2.3% of its total portfolio, and Italy, with 98 billion NPLs, 5.4% of its total stock.

Original Story: EjePrime.com
Photo: Website Grupo Santander
Translation: Prime Yield

Santander prepares to sell €700 million of distressed commercial loans

Santander is preparing to sell €700 million worth of doubtful trade receivables, financial sources have confirmed to elEconomista. The divestment is, according to the same sources, at an initial stage and is being designed if it will be carried out as a block sale or divided into different portfolios, something that will be decided depending on the appetite of investors interested in these credits. In any case, the idea is to sell them during the course of this year.

With this operation, Santander recovers the pace of sales of non-performing loans, after a year in which the sector was at a standstill due to the pandemic. Santander’s real estate activities unit, integrated within Spain, has EUR 2,781 million in gross customer loans for real estate activity on its balance sheet, of which €924 million are classified as non-performing. Last year it only reduced €24 million of the total with portfolio sales, recoveries and subrogations by third parties, compared to the €1,685 million it reduced in 2019 or the €1,267 million in 2018.

Despite this slowdown in the drain on this type of assets, Santander closed the first quarter of the year with an NPL ratio of 3.20%, lower than in December, when it stood at 3.21%. At the level of Spain, the area with the highest NPL ratio of the whole group, it also continued to fall from December 2020 to March 2021, from 6.23% to 6.18%. This ratio could rise as the loan moratoriums granted expire. The group approved loan deferrals totalling 112 billion, of which 96 billion have expired, and of these, 5% have been classified as doubtful.

Original Story: El Economista | Araceli Muñoz and Eva Díaz
Photo: Santander Facebook
Translation: Prime Yield

Novo Banco’s owner sold “Vilamoura” to Arrow for €100M

The US-based Lone Star has sold “Project Vilamoura” to a group of investors, including British fund Arrow Capital and businessmen Filipe de Botton and Alexandre Relvas.

The US-based Lone Star has closed the sale of the Vilamoura Project – which includes, literally, a part of Vilamoura – to British Arrow Capital and a number of investors, including Filipe de Botton and Alexandre Relvas, according to ECO. The “package” includes the Vilamoura marina, two companies and 21 plots of land with construction potential. The operation was closed for about 100 million euros, a value well below what was being asked initially, since the project also included Cidade Lacustre (expansion), which ended up being rejected at the end of last year.

It was in 2015, in a “competitive” process, that the owner of Novo Banco bought these assets. Two years later, at the end of 2017, it put them on the market for sale. Among some obstacles, it took another three years to get them sold. The deal was closed last week, according to ECO, and should have been around €100 million, a figure below the €180 million that Lone Star was initially asking for.

On the buyer’s side is the British fund Arrow Capital, which owns the Portuguese companies Whitestar and Norfin, and a number of private investors, including Filipe de Botton and Alexandre Relvas, partners of Logoplaste, and João Brion Sanches, founder of Norfin along with the two previous entrepreneurs. Contacted by ECO, both the Arrow Group and Filipe de Botton declined to comment.

The project comprises 100% of Vilamoura World’s share capital (the company that manages all these assets), 21 plots of land for development, 49% of Inframoura (the municipal company that manages Vilamoura’s public works) and, finally, the marina, which is the most interesting asset. “Opened in 1974, it is the largest in the country with 825 berths,” reads the project teaser to which ECO had access. The marina concession is valid until 2060.

In recent years, several projects have been completed in Vilamoura, resulting in 704 homes in the pre-crisis period (Victoria Boulevard, The Victoria Gardens, 1st phase of L’Orangerie, Villa Rosa Golf, Monte Laguna, The Victoria Residences and Laguna Golf) and 219 in the post-crisis period (Gardens Vilamoura, Laguna Village, 1st phase of Uptown, 2nd phase of L’Orangerie, Villa Nature and the 1st phase of Central).

For the future, among the various projects planned, there will be 3,658 housing units, totalling 566,374 square metres, says the teaser.

Original Story: Eco |Eco News
Photo: Vilamoura World Site
Edition: Prime Yield

National Bank of Greece sells €174 million Romanian NPLs portfolio to Bain Capital Credit

National Bank of Greece (NBG) has completed the disposal of a 174 million euro ($212 million) Romanian-risk corporate non-performing loans (NPLs) portfolio to Bain Capital Credit.

The transaction is capital neutral, NBG said in a press release.

NBG announced the NPLs sale in December.

At the time, NBG said that the transaction is being implemented in the context of NBG’s non-performing exposure deleveraging strategy and in accordance with the Operational Targets submitted to the Single Supervisory Mechanism and has a neutral capital impact to the bank.

The National Bank of Greece is a global banking and financial services company with its headquarters in Athens, Greece. Some 85% of the company’s pre-tax pre-provision profits are derived from its operations in Greece, complemented by 15% from Southeastern Europe, according to its website.

In January 2020, ​NBG announced the completion of the sale of its 99.28% stake in Banca Romaneasca to Export-Import Bank of Romania (EximBank).

The Greek group is now present in Romania with leasing company NBG Leasing and Insurance company Garanta Asigurari, according to its website.

Original Story: SeeNews.com | Nicoleta Banila
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

Portuguese banks brace for worsening asset quality in 2021

Loan moratoria and other policy measures have protected Portuguese banks’ asset quality so far during the COVID-19 pandemic, but this may change in 2021 as many programs are unwound, DBRS Morningstar said in a report April 8.

Despite a doubling of loan loss provisions, the stock of nonperforming loans at a group of Portugal’s largest banks shrunk by more than a fifth in 2020, the credit rating agency estimated. Its sample included Caixa Geral de Depósitos SA, Banco Comercial Português SA, Novo Banco SA, Banco Santander Totta SA, Banco BPI SA and Caixa Económica Montepio Geral.

Banco de Portugal data shows a similar trend for the whole banking system, with 2020 loan loss charges — measuring total credit impairments as a percentage of average gross customer loans — nearly doubling to 1.03% from 0.52% in 2019, and the NPL stock dropping to €14.36 billion in 2020 from €17.20 billion a year ago.

NPL sales, write-offs and cures helped reduce the bad loan stock in 2020 and COVID-19-related policy measures have staved off the impact of the economic downturn on banks’ credit portfolios, DBRS Morningstar said.

“Our view is that asset quality may deteriorate from late 2021 with the eventual loosening of moratoria and other support schemes,” Nicola de Caro, senior vice president at the global financial institutions team of DBRS Morningstar told S&P Global Market Intelligence.

With over 20% of total loans under moratoria, Portugal’s banks are among the most dependent on such pandemic support schemes in Europe. The majority of these loans comprise exposures to small and medium-sized enterprises which are set to expire in the third quarter of 2021, DBRS Morningstar said.

At 2020-end, Portugal’s banking system had the third-largest stock of loans and advances under moratoria, of €41.5 billion, according to data by the European Banking Authority. Italy and Spain ranked first and second with a stock of €115.6 billion and €57.9 billion, respectively.

Bad loan risk

According to current estimates out of Portugal, up to 10% of loans currently under moratoria could “go bad” in the future, Olivia Perney Guillot, managing director at the financial institutions team of Fitch Ratings, said in an interview. Fitch expects asset quality to deteriorate in 2021 but some banks in southern Europe will be able to offset some of the negative impact through NPL sales and write-offs as they did in 2020, Rafael Quina, on the financial institutions team at Fitch Ratings, said.

The NPL ratio for loans in already-expired moratoria schemes in Portugal stood at 2.8% at the end of 2020, almost as high as the 2.9% in Italy but lower than the 4.2% in Spain, EBA data shows.

There will be wide differences in risk depending on the borrower type, Quina said. Residential mortgages, for example, would be typically less risky than exposure to unable-to-pay SMEs that are in the tourism sector, he told S&P Global Market Intelligence.

Based on its exposure, Portugal is the fourth most-dependent country on the tourism sector in the eurozone, DBRS Morningstar estimated in a Sept. 14, 2020 report. The country ranked second by the share of tourism sector contribution to GDP — 16.5%, and third by the share tourism employment to total employment — 18.6%, according to the report.

“In DBRS Morningstar’s view, the longer the epidemiological situation continues, the greater the risk that the travel and tourism industries in these countries will suffer more lasting damage, resulting in permanent job losses and closures of some businesses. Even after the travel restrictions are largely lifted across geographies, the fear of travel might linger for longer,” the rating agency said at the time.

Original Story: SP Global| Vanya Damyanova
Photo: Photo by Alfonso Romero from FreeImages.com
Edition: Prime Yield

CaixaBank rules out mortgages and deposits as strategic in the future

The new CaixaBank started up just 10 days ago after the absorption of Bankia and its CEO, Gonzalo Gortázar, has already outlined some details on the strategy of the largest bank in Spain to face the profitability problems of the traditional business due to the negative interest rates. The main executive of the entity has defended in an event organized by ‘El Confidencial’ that the traditional activity of deposits and mortgages no longer works and has opted to grow through new businesses.

The business of taking deposits and giving mortgages does not work with negative interest rates,” said Gortázar in a discussion where he coincided with the deputy governor of the Bank of Spain, Margarita Delgado. The CEO of CaixaBank has indicated that “today” the function of taking deposits “makes us lose money”. And it considers that this loss is only cushioned “in part” with the granting of loans. “We want them to bring the money to the bank but you see that something does not work if such an important function is not profitable, but quite the opposite,” stressed the manager.

Gortázar has acknowledged that before the pandemic the market was counting on a rise in interest rates soon, but now the situation is different. “We have been with negative rates for five years and the market expects there to be at least another five,” stated the CEO of CaixaBank. To this he added that, with the current demographic and economic model of the euro zone, “you have to think that interest rates are going to be very low for life.”

In this sense, Gortázar has pointed out that a consequence of this monetary policy is that it affects the profitability of the bank, although he has clarified that he prefers “these secondary effects” to a “disease” due to a credit crisis, as happened after the bursting of the housing bubble. This means that “the return on credit production is not enough to compensate for losses on deposits” and therefore advocates “seeking new income for the banking system.

We have to broaden the vision outside the box, so that the numbers add up. If not, we can only continue cutting costs and dwarfing ourselves, and that, in the end, is a trip to zero”, defended Gortázar during the discussion. The manager has recognized that the way of charging more commissions to clients so that the bank offices remain open “do not make practical sense” because “people do not accept them and do not understand them.”

It is at this point where the CEO of CaixaBank is committed to “offering more things” to customers, in order to find new revenue streams for banking. In this way, he advocates moving from a “banking services” company to a “financial services” platform. This section includes activities such as insurance or investment funds. In both businesses, CaixaBank has seen its dominance position strengthened with the absorption of Bankia. “We have to find a joint package that works,” said the manager.

These activities are the ones that are moving the banking sector in recent years since they allow new income in commissions for the management of their clients’ assets, compared to income from interest on loans that is in decline. More than a quarter of the fees charged by banks in 2020 already came from investment funds, pension plans or insurance.

To these businesses, Gortázar has indicated that others are being added in the bank in recent times, such as activities “more at the limit” of the financial business field such as mobile financing or renting. The sale of alarms also appears among the attractive businesses for CaixaBank, where it has an alliance with Securitas Direct. All these activities, he pointed out, “already offer us almost 100 million euros in the income statement”.

Original Story: Spain News | Diego Larrouy
Photo: Caixa Bank website
Edition: Prime Yield

Greece gains EU okay to extend ‘Hercules’ bad loan reduction scheme

Greece already secured approval from EU competition regulators to extend its “Hercules” bad loan reduction scheme to help banks reduce the mountain of impaired credit burdening their balance sheets.

The scheme was launched in October 2019 to help the country’s banks offload up to 30 billion euros of bad loans by turning bundles of impaired loans into asset-backed securities that can be sold to investors. Athens wants to prolong the scheme to October 2022.

The European Commission said its approval was on the basis that not state aid would be involved.

I welcome the prolongation of the Hercules scheme, which has already been very successful in providing a market conform solution to remove non-performing loans from the balance sheets of Greek banks, without granting aid or distorting competition,” European Competition Commissioner Margrethe Vestager said in a statement.

Original Story: Reuters | Staff
Photo: Photo by Szymon Szymon in FreeImages.com
Edition: Prime Yield

Government negotiates loan for a further injection into Novo Banco

The Portuguese government is trying to arrange finance so that the Resolution Fund can channel another tranche of money into Novo Banco.

The bank that emerged from the BES debacle has asked for €600 million this year (when the State Budget only allowed for €475 million). 

The government apparently seems prepared to spend €400 million, but first it has to raise it. Bloco de Esquerda has said Novo Banco should get another cent.

Original Story: Portugal Resident| Natasha Donn
Photo: Novo Banco website
Edition: Prime Yield

Abanca acquires the Novo Banco’s retail network in Spain

Abanca, the heir group of the old Galician savings banks, has closed the purchase of the retail network from Portugal’s Novo Banco in Spain. After the operation, Abanca, will tottal 71,338 million euros in assets owned and 42,368 million of loans to customers under management, 46,037 million in deposits and 11,789 million in off-balance-sheet liabilities. It will have 6,312 employees and 745 offices.

With this, the Galician entity reports that it reaches 100,000 million in business volume and will increase its presence both in retail banking and in the business of companies. The group assures that “the purchase presents a low execution risk and minimal capital consumption.” The agreement contributes 4,287 million of business volume and 10 branches, in addition to 172 employees and 102 financial agents. The closing of the operation is awaiting the authorizations of the competent authorities.

The bank defends that the operation “strengthens” its presence in Spain, especially in Madrid and in “strategic” businesses for the entity. The first is the Personal and Private banking business that has already grown in recent years with the development foreseen in its Strategic Plan and with the purchases of the Deutsche Bank PCB network in Portugal, that of Banco Caixa Geral in Spain and, more recently with the acquisition of Bankoa. The second of the axes that will be reinforced with the purchase of Novo Banco’s Spanish network is the business of companies, especially in off-balance-sheet operations and foreign activity.

In addition, Novo Banco will provide growth potential in lines such as insurance activity. The insurance business is in full growth in Abanca’s strategy after the relaunch of the life insurance company and the creation of Abanca Seguros Generales together with Crédit Agricole Assurances, which already has permission to operate and which will launch its first products own in the next few weeks.

Abanca adds with this operation a new milestone in the construction based on mergers of the banking group that emerged from the old savings banks and is its sixth operation in seven years. The first was in 2014, with the integration of Banco Etcheverría. After that, in 2017, came the purchase of Popular Financial Services and a year later, that of Deutsche Bank PCB. That same year, Abanca added the business of another Portuguese bank in Spain, Caixa Geral. Last year it incorporated Bankoa, whose integration will take place throughout this year.

Original Story: Spain News | News
Photo: Abanca website
Edition: Prime Yield

Impact from the pandemic on Greek banks to intensify in 2021

The impact of the pandemic on the banking sector is expected to intensify in 2021, mainly in the form of a new wave of NPLs, as well as an anticipated worsening of the Deferred Tax Credits (DTCs) as a share of total prudential own funds, according to the Bank of Greece, the country’s central bank. 

In the governor’s annual report, the central bank said that it has estimated that new NPLs in 2021 will amount to 8-10 billion euros.

In addition to the twin problem of NPLsand DTCs, Greek banks face a number of serious challenges, common to most euro area banks, such as low core profitability, increased competition from non-banks, challenges stemming from the incomplete banking union, and others associated with the impact of climate change and cyberattacks,” the bank said. 

“Non-performing loans (NPLs) stood at 47.4 billion euros at end-December 2020, down by about 21 billion euros from a year earlier. The NPL ratio to total loans remains high, at 30.2% compared with an EU average of just 2.6%. However, compared with its March 2016 peak, the stock of NPLs has declined by roughly 60 billion euros, mainly through loan sales and write-offs, and much less through recoveries from active NPL management. 

By the time the Hercules plan is completed in the course of 2021, theNPL ratio will likely have fallen to about 25%and the average capital adequacy ratio to below its current levels, with a simultaneous increase in the share of DTCs. These estimates do not take into account the new NPLs that are expected to be added to the current stock as a result of the pandemic shock,” the report added.

Against this background, additional measures need to be taken to facilitate the frontloaded recognition of credit losses on account of the pandemic, as well as the fast repair of bank balance sheets together with addressing the DTC problem. To this end, the Bank of Greece called on the government, as a complement to the Hercules plan currently underway, to establish an Asset Management Company (AMC). 

The Bank of Greece proposal simultaneously addresses the problem of DTCs. The government is examining the advisability of establishing an AMC, as proposed by the Bank of Greece, and has applied to the European Commission’s DG Competition for an extension of the Hercules plan. Should the proposal of the Bank of Greece not be selected by the authorities, an alternative way of addressing the problem of DTCs will need to be found that is compatible with the applicable capital requirement legislation,” stressed the bank. 

The commitment of sizeable public funds in the form of state guarantees, to support NPL securitisation through the Hercules plan, which was a decision in the right direction, should ensure a definitive and comprehensive solution to the twin problem of NPLs and the high share of DTCs in banks’ regulatory own funds, it said. 

Original Story: Ekathimerini | Newsroom
Photo: Bank of Greece Website
Edition: Prime Yield

Almost a third of Portuguese companies in state of “significant debt”

Roughly 30% of Portuguese companies suffered “significant defaults” in 2020 despite the various State led injections of liquidity and fiscal stimuli designed to “atentuate the economic effects provoked by the pandemic”, reveals a study on ‘management of credit risk’ promoted by Spanish agencies Crédito y Caución and Iberform.

Original Story: Portugal Resident| Natasha Donn
Photo: Photo by Pasqualantonio from FreeImages.com
Edition: Prime Yield

Almagro Capital plans to invest €1 billion in reverse mortgages

The investment strategy of reverse mortgage purchase by Socimi Almagro Capital consists of acquiring real estate from older people when they decide to monetize their illiquid savings concentrated in their habitual residence, but staying in the same home for life.

In this sense, the company has an ambitious growth plan for the coming years. Currently, it has a portfolio of a portfolio of 83 homes and an investment of about 40 million. But the objective of the Socimi is to multiply the assets by 20 in the next three or five years, according to Bruno Bodega, CEO of Almagro Capital, to El Economista.

For this, the firm expects to have a capital of 500 million that will allow them to make an investment of 1,000 million in that period. From the Socimi they assure that they already have the “commitment” of some of the partners who entered the last capital increase.

However, the CEO of the Socimi points out that beyond large investors, they want many individuals to enter, because it is a good and comfortable investment. In this regard, he clarifies that «we believe that it is better to participate in 0.1% of a thousand houses than to have one». According to the manager, the share offers an annualized return of 5%.

In Spain, only Almagro Capital operates in the reverse housing model, but in Europe its use is much more widespread. For example, in England and France it is a formula that is highly developed and transactions worth around 4,000 million euros are closed.

Original Story: Iberian Property | Alexandre Lima 
Photo: Almagro Capital site
Edition: Prime Yield

Greek banks will absorb additional NPL disposals, says DBRS Morningstar

A few days after upgrading the outlook of the Greek credit sector from stable to positive, DBRS Morningstar said in a commentary it believes that recent subordinated debt issuance and capital actions should enable the banks to absorb the impact of additional nonperforming exposure (NPE) disposals.

Nevertheless, the global credit rating agency considers external factors such as investor appetite and the macroeconomic environment to be key to the banks’ success. It noted that the Greek banks combined reduced their NPE stock by 50% year-on-year on a pro forma basis as of end-2020 and have announced further NPE disposal plans.

Strengthened capital bases through restored and ongoing access to the subordinated debt capital markets along with capital actions should enable the banks to absorb the impact of the newly announced NPE disposal plans, DBRS Morningstar said, adding that continuous investor demand and the pace of the economic recovery, which will likely dictate the performance of the loans that have been granted payment holidays, will be crucial for the banks to achieve their targets.

Following significant NPE reduction in a challenging year and recent announcements for further de-risking, we consider that strengthened capital bases should enable the Greek banks to absorb the impact of the additional NPE disposals. The economic recovery along with the level of investor demand will be key in the banks’ meeting their targets.” the rating agency commented.

Original Story: EkathimeriniAuthor: newsroom
Photo: Photo by Lotus Head in FreeImages.com
Edition: Prime Yield

Unicaja and Liberbank shareholders approved their merger to create Spain’s 5th largest bank

Shareholders of Spanish lenders Unicaja and Liberbank approved their merger, paving the way for the creation of the country’s fifth biggest bank in terms of assets.

The merger – under the terms of which Unicaja will fully absorb its rival to create a bank with 110 billion euros in assets – will bring Spain’s number of banks to 10, down from 55 prior to the 2008 economic crisis.

This marks a further acceleration of the sector’s consolidation in Spain after the merger between state-owned Bankia and Caixabank was completed last week to create the largest domestic lender.

The Unicaja-Liberbank deal will allow the combined bank to save 192 million euros annually and reach a capital ratio of 12.4% following 1.2 billion euros of merger-related costs, the banks said.

“The (merged) bank expects to be more profitable and efficient, which will result in higher organic capital generation to finance its growth, and higher recurring dividends,” Liberbank Chief Executive Manuel Menendez told shareholders.

Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the coronavirus pandemic is forcing a focus on further cost-cuts, including through tie-ups.

Unicaja shareholders approved a total payment of 16.91 million euros against 2020 results, while Liberbank approved 7.86 million, both in accordance with the 15% dividend cap set by the European Central Bank (ECB).In December the ECB decided to let banks pay out part of their cumulative 2019-2020 profits to shareholders if they have enough capital, easing a blanket ban on dividends and buybacks set during the first wave of the coronavirus crisis.

Original Story: Reuters
Photo: Unicaja site
Edition: Prime Yield

Portugal’s frozen loan repayments decline further in the beginning of the year

The volume of loan repayments suspended by Portuguese banks under a scheme to help businesses and individuals through the pandemic slipped in January to 45.7 billion euros ($54 billion), further retreating from a peak in September.

The latest figure released by the Bank of Portugal compares with 46.1 billion euros of the so-called loan moratoriums, including capital and interest, in December and an all-time high of 48.1 billion in September.

The central bank said 54,000 companies had access to the scheme in January, for a total of 24 billion euros, or 33.2% of total corporate loans.

“The accommodation and restaurant companies were the ones that stood out the most, with 57% of their total loans covered by this measure,” it said, without giving further details.

Portugal’s once-booming tourism sector suffered its worst results since the mid-1980s last year due to the pandemic.

Private individuals suspended 20 billion euros of loan repayments, or 16% of their total loans, the financial authority said, adding that mortgage loans made up 86% of that amount.

The freeze, in part aimed at avoiding a jump in bad loans at banks that spent the past five years reducing their ratios of non-performing loans, will end on Sept. 30. Some loans, namely mortgage loans, will start paying interest as of April.

Portugal’s largest listed bank Millennium bcp wants the government to extend the loan repayments freeze for pandemic-hit tourism companies beyond September if the health crisis has not been overcome by then, Chief Executive Officer Miguel Maya said in February.

Portugal’s lenders have cut their average non-performing loan (NPL) ratio to around 5% of total credit, but it is still almost twice the European average. 

Original Story: Reuters | Sérgio Gonçalves 
Photo: Photo by Armindo Caetano from FreeImages.com
Edition: Prime Yield

Piraeus Bank gets shareholder approval for 1bln euro equity offering

Piraeus Bank, one of Greece’s four largest lenders, got the green light for a planned equity offering to raise about 1.0 billion euros from shareholders at an extraordinary meeting.

The bank, 61.3% owned by Greece’s bank rescue fund, the Hellenic Financial Stability Fund (HFSF), has said the offering of new shares will dilute the HFSF’s stake to a minority holding without any blocking power, meaning below 33%.

Chief Executive Christos Megalou told shareholders that the plan would help the bank to cut the ratio of bad loans within its overall debt portfolio.

The reduction of our stock of non-performing exposures (NPEs) is the priority of the ‘Sunrise’ plan … to get us to a single-digit NPE ratio,” Megalou said.

Piraeus Bank’s NPE ratio at the end of last year was 45%, not counting two securitisations that will be concluded later this year.

He said cleansing of the bank’s balance sheet of bad loans would “allow the sustainable funding of Greece’s economy”.

The bank said 99.3% of shareholders at the meeting voted in favour of the plan to issue new shares.

The equity offering will be a combined international placement with institutional investors via bookbuilding, and a domestic public offering that will take place simultaneously.

The issue price of the new shares will be determined in the bookbuilding and will be the same for both institutional and domestic investors.

Original Story: Reuters
Photo: Piraeus Bank Site
Edition: Prime Yield

SPAIN Spain’s decade-old ‘bad bank’ liabilities push debt to 120% of GDP

Spain’s public debt reached 120% of gross domestic product last year, above the previously reported 117.1%, the Bank of Spain said on the end of March, after adding ‘bad bank’ liabilities stemming from the financial crisis a decade ago as demanded by Brussels.

The debt-to-GDP ratio spiked from 95.5% at the end of 2019 and 114% in the third quarter of 2020, mostly due to increased spending to cushion the effect of the COVID-19 pandemic and a simultaneous economic slump.

The higher final debt ratio confirms what a senior government source told Reuters last week.

The ‘bad bank’, known as SAREB, was created to take on over 50 billion euros in bad loans and other toxic assets from nine Spanish savings banks during the financial crisis in 2012 as part of an international bailout for Spain’s financial sector.

The accounting change follows demands from Eurostat, the European Union’s statistics body, that the bad bank, known as SAREB, should be considered a public entity. 

Original Story: ReutersAuthor: Aida Pelaez-Fernandez 
Photo: Photo by Victor Iglesias from FreeImages
Edition: Prime Yield

Moody’s upgrades Greek Bank’s outlook to positive

Moody’s Investors Service changed Greek banks’ outlook to positive from stable.

In a report, the credit rating agency said that its decision reflected mainly expectations for a further improvement in reducing the high levels of non-performing loans, as banks sell off legacy problem loans and move on with securitizations, combined with expectations for a gradual strengthening of Greek banks’ profits (core earnings).

The outlook reflects Moody’s assessment of the basic credit conditions that will affect Greek banks’ credit rating in the next 12-18 months.

Original Story: The National HeraldAuthor: Athens News Agency
Photo: Photo by Jonte Remos in FreeImages.com
Edition: Prime Yield

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