Cajamar continues to clean up its non-performing assets. The bank has transferred a new portfolio of foreclosed assets, mainly residential, to the KKR fund. The assets, included in the so-called Eros II project and sold to the fund, have a gross value of 14.2 million euros.

In recent months, the company has also placed the Atenea II portfolio with specialists Goriz Advisor and Gannet. With a volume of 17.5 million euros, the latter portfolio consisted of 200 NPLs (non-performing loans) secured by mortgages.

These are very small operations compared to those transferred in recent years, but they continue to improve the quality of the balance sheet and place the management of non-performing assets in the hands of specialists.

The institution ended the year with 1,318.8 million in non-performing assets, having reduced its exposure to foreclosed assets by 31.5% (527.81 million) and its exposure to non-performing loans to 1.93%, one of the lowest in the sector. Its exposure to doubtful loans fell to 791.05 million and it maintains provisions covering 72% of these risks.

Like the rest of the banking sector, the bank frequently resorts to the sale of non-performing assets. Recent transactions include the transfer to Balbec Capital of 136 million in healthy and non-performing loans in the Utrecht project.

Cajamar has also concluded transactions with Waterfall Asset Management, involving the sale of doubtful unsecured loans; with LC ASSET 1, Lindorff, Bain Capital, Link Financial and GCBE Advanced Solutions (formerly Gescobro), among others.

Original Story: El Economista | Author: Eva Contreras
Edition and translation: Prime Yield

KKR & Co. Inc. is in advanced talks to sell its Spanish real estate management company Hipo to Pollen Street Group Ltd., according to people with knowledge of the matter.

The discussions are ongoing and KKR could still decide not to pursue the deal or select another people added, asking not to be named discussing private information.

Original Story: Bloomberg | Author: Jorge Zuloaga
Edition: Prime Yield

Last year, Spanish banks sold portfolios of toxic assets for a total value of €6.7 billion, including a portfolio of €1.5 billion from Sareb, according to a compilation by Axis Corporate (Accenture).

If we add the transactions that took place in the secondary market between the private equity firms themselves, the amount rises to €17.86 billion, a volume similar to that of 2023, but half the historical record of 2018. At the same time, Ana Botín suddenly transferred all of Popular’s real estate risk (€30 billion) to Blackstone.

Santander was the most active bank last year, with seven transactions of toxic asset portfolios for a total of €1.8 billion. CaixaBank is next in the ranking, having transferred batches of non-performing loans and real estate for a total of €973 million.

Sabadell follows with €938 million.

Sareb, the vehicle in which the toxic assets of the nine savings banks bailed out during the financial crisis are parked, transferred 1.5 billion in unpaid loans to Axactor in one fell swoop.

According to Accenture, this year will see an acceleration in the sale of real estate risk assets by Sareb, as its legal dissolution is imminent. This is scheduled for 2027, although the government has the power to extend the deadline.

The size of portfolios changing hands has fallen sharply in recent years. The size of 78% of portfolios is less than €500 million.

Going forward, Accenture predicts that most buyout activity will focus on unsecured and refinanced loans.

€73.5 billion of NPL to be unwound

The clean-up of Spanish banks’ real estate assets is well underway after almost twenty years. But there are still €73.5 billion worth of toxic assets to be unwound.

Santander is the bank with the largest real estate holdings on its balance sheet: €36 billion. It is followed by BBVA with €15.327 billion. And CaixaBank with 10.352 billion.

Unicaja made a clean sweep last year and its stock of toxic assets fell by 14%. Its risk volume (€1.348 billion) is similar to that of Bankinter, which did not lend to property developers in the years before the property bubble.

The private equity firms Cerberus, Blackstone, Lone Star and Axactor are the ones that have fattened their portfolios with toxic assets from Spanish banks over the last decade.

Between the four of them, they have acquired €97.35 billion of real estate risk owned by the banks or bought back from other private equity firms. This is half of the €207.52 billion that have changed hands, according to Axis Corporate data.

The real estate legacy still to be liquidated is now reduced and so well provisioned that portfolio sales no longer cause losses in the income statement.

Original Story: Expansión | Author: R.Lander
Edition and translation: Prime Yield

Together with KKR, its reference shareholder, Hipoges has created a vehicle to invest in mortgage debt. Starting with an initial endowment of €100 million, it will focus on the acquisition of small portfolios of non-performing loans (NPL) and real estate owned (REO) in Spain and Portugal through transactions of between €5 million and €25 million. The idea began to take shape at the end of 2023, crystallised last summer with the assembly of the corporate structure to complete its first purchase, and since September has already completed four transactions, reveals to elEconomista.es Pelayo Puche, Executive Director Advisory of Hipoges and promoter of the vehicle.

The fund, called PSD Lux, ‘is the first company that Hipoges has created specifically to actively buy portfolios’, he explains. It is common for servicers to co-invest with their clients in order to ‘align interests’, and Hipoges has done some similar deals in the past, although they are almost exceptional and for very limited amounts. To date, it has not actively sought to acquire portfolios. Its plan for 2025 is to use the expertise it has acquired over the years in managing large portfolios in the banking sector to focus on developing business with financial institutions.

The rationale behind this commitment is that it sees an opportunity in “three very clear needs” in the market. Firstly, it wants to offer an additional service to bank clients for whom it already manages distressed portfolios: “Our usual clients have a portfolio size above which they do not pay attention because it is not big enough and the work involved in valuing a small portfolio is practically the same as that of a large one,” says Puche. In other words, there are neglected portfolios that he wants to pay attention to and thus strengthen the relationship with existing or new clients.

On the other hand, he sees opportunities in the secondary market, buying portfolios that the banks have sold long ago and which, after being managed for five, six or eight years, “are also starting to get too small and the owners, the funds that bought them at the time, are starting to stop paying attention to them because they are too small”. These are the so-called ‘tail’ portfolios, and his vision is twofold: to acquire such portfolios from client funds, so that ‘they keep the management in Hipoges’, and to ‘get a bit more assets under management’ by bidding for similar portfolios that the funds have with other servicers. Since the launch of the new vehicle, the company has closed four deals on bank assets that had not previously come to market, all with Spanish companies. Closing four will take us to 40 since September,” he says.

Movements in the sector

 The launch of the vehicle comes at a time when servicers are reinforcing or redefining their strategies in order to improve their positioning, also in the midst of the concentration process that the sector has been undergoing for several years and which could possibly include KKR’s exit from Hipoges. According to some media reports, the US giant has sounded out the appetite for the servicer, attracting the interest of funds such as DoValue, Arrow Global Group, J.C. Flowers & Co and Pollen Street Group. KKR bought 84% of Hipoges in 2017, with the rest of the capital in the hands of several of the servicer’s executives. An exit, which does not necessarily have to be completed, would be part of the natural turnover of assets in private equity firms. The company declined to comment on the hypothetical transaction.

The alliance with KKR confirms the good understanding with the shareholder, who did not want to abandon the project, while Hipoges continues its strategy of greater diversification in order to strengthen its market position and reduce its dependence on the core business of maintenance, with which it started operations in Spain in 2008. In fact, the creation of the fund is an initiative of Hipoges, whose teams will be even more responsible for the assets it incorporates. The paradigm shift with PSD is that they give us much more independence than we would have in a large portfolio. They put in almost all the capital, but they do less work than they would in a normal portfolio, they delegate more to the Advisory and Hipoges team,’ says Puche.

The €100 million in the vehicle is a start-up budget. The idea is to try to invest €100 million in the first year or two, and after that we will see how it goes and KKR will decide whether to give another 100 million or what to do,’ he says. The only asset class a priori ruled out for the fund is unsecured or consumer credit. Its preference is for assets that are in line with Hipoges’ core business, which is very much focused on residential mortgages for individuals, as well as corporate loans, especially to developers, and real estate. In terms of financing, the fund’s appetite includes both NPLs and refinancing or current loans, even if they have had a certain incidence in the last year (the so-called RPL or reperforming loans).

Original Story: El Economista | Author: Eva Contreras
Edition and translation: Prime Yield

Sareb has decided to suspend its housing sales activities for the next few weeks in view of the future transfer of its assets to the new public housing company to be created on the basis of the existing Entidad Pública Empresarial de Suelo (Sepes). According to El Economista, this decision will have a clear impact on the administrators Hipoges and Anticipa/Aliseda, who are in charge of selling these assets, which form part of the portfolio of the so-called bad bank, and whose mandate ends in August.

According to the newspaper, in the next few days Sareb’s board of directors will meet and a shareholders’ meeting will be convened to approve the cessation of commercial activity in the residential sector and to begin a period of analysis to define the scope of the assets to be transferred to the new public entity.

However, it seems that not all of the housing portfolios will be transferred, as initially announced, as it will be studied which properties make sense for social rental use, as the public company will give them.

Although most of Sareb’s portfolio is perfectly suitable for conversion to social rental housing, ‘there are specific developments or unique assets that, because of their location or nature, would not make sense to transfer to the new entity’, the sector explains.

Sareb itself must have a minimum level of income to keep its machinery running, not only for its own survival but also to be able to provide the new public entity with more housing. However, it is not clear to anyone that this slowdown in sales will have an impact on the business of the service providers responsible for this mission.

In 2022, the award of management and marketing services will swell the portfolio of properties and loans to around 25.3 billion euros.

Original Story: El Economista | Author: Alba Brualla
Edition and translation: Prime Yield

The Spanish banks’ non-performing loan (NPL) ratio stood at 3.32% at the end of December, the lowest level since November 2008 when it was 3.21%, according to preliminary data published by the Bank of Spain.

This is the fourth consecutive monthly fall: compared with November, it fell by six basis points, while compared with December 20-23, it fell by 22 basis points.

In terms of the volume of NPL, it fell to EUR 39,358 million in December, EUR 939 million less than in the previous month. Compared to December 2023, the reduction is  EUR 2,510 million.

In addition, the total stock of loans has also decreased: at the end of December the ‘stock’ stood at EUR 1.18 trillion, a decrease of around EUR 7,414 million compared with November. On the other hand, compared with December 2023, the volume of bank loans increased by EUR 4 025 million.

The data broken down by type of institution show that the ratio of doubtful assets of all deposit-taking institutions (banks, savings banks and cooperative societies) closed December at 3.24%, two basis points lower than in November and 20 points lower than in the same month of 2023.

For the twelfth month, the portfolio of doubtful assets of this type of institution decreased by EUR 612 million to EUR 36,599 million. Compared with December 2023, this figure is around EUR 2,169 million lower. For their part, financial institutions saw their NPL ratio fall to 5.65% in December, more than one percentage point lower than in November. Compared with December 2023, it fell by 68 basis points.

In absolute terms, the volume of doubtful loans of this type of institution was EUR 2,565 million at the end of December, EUR 344 million less than in November. Compared to the same month of the previous year, the doubtful balance was reduced by EUR 346 million.

According to the Bank of Spain, provisions for all credit institutions stood at EUR 28,902 million in November, a reduction of EUR 491 million on the previous month. Compared to the previous year, provisions decreased by EUR 968 million.

Original Story: Europa Press
Edition and translation: Prime Yield

The ratio of doubtful assets of financial credit institutions (EFCs), which specialise in consumer credit, closed below 6% in 2024, returning to pre-crisis lows, according to preliminary data published by the Bank of Spain.

Specifically, SCIs closed with a ratio of 5.65%, the lowest level since January 2020, according to the historical series published by the regulator. Compared with November, the fall is 1.07 percentage points, while compared with December 2024, the reduction is 68 basis points.

In terms of volume, the stock of doubtful assets of SCIs amounted to EUR 2,565 million at the end of December, EUR 344 million less than in November. Compared with the same month last year, the stock of doubtful assets was reduced by EUR 346 million.

The total amount of loans granted by financial institutions at the end of December was EUR 45,369 million, EUR 2,086 million more than in November. Compared with the same month in 2023, however, the volume of loans fell by EUR 601 million.

Lastly, the provisions of the SCIs to cover the doubtful balance stood at  EUR 1,776 million in December, EUR 83 million less than in the previous month and EUR 57 million less than the reserves in December 2023.

Original Story: Europa Press
Edition and translation: Prime Yield

The Council of Ministers approved the Credit Purchasers Act, which transposes the European Directive on the same subject and amends the Consumer Credit Contracts Act and the Real Estate Credit Contracts Act. The aim is to regulate the market for the purchase and sale of non-performing loans and to introduce certain obligations for mortgage and consumer credit borrowers.

Specifically, the bill regulates the purchase and sale of non-performing loans (NPL) granted by credit institutions and financial credit institutions, establishing common rules with the rest of the European Union.

The next step, once approved by the government, will be to send it to the Congress of Deputies for parliamentary processing.

Firstly, it regulates the activity of doubtful credit management, which consists of the collection or renegotiation of this type of credit, which becomes a reserved activity and requires prior authorisation from the Bank of Spain. In order to obtain this authorisation, the law establishes the need to have an “adequate” internal credit management system and a policy that “guarantees the protection and fair treatment of borrowers”.

It also regulates the purchase and sale of NPL, ensuring that the conditions and rights of borrowers are maintained and transferring to the purchaser of the loans the obligations of transparency, protection and information, including compliance with the codes of good practice to which the original creditor has subscribed.

The draft regulation sets out additional safeguards for the protection of borrowers, requiring both purchasers and servicers to provide “fair treatment and adequate information”, as well as an “adequate” borrower assistance and out-of-court redress service.

In order to ensure compliance with these obligations, the Banco de España will supervise the administrators, as well as the compliance of credit purchasers with these obligations, and will establish the corresponding system of infringements and sanctions.

Real estate and consumer credit

The sectoral regulations on consumer credit and real estate credit will also be amended to introduce the obligation for creditors to have a debt renegotiation policy. This means that creditors will have to offer their customers measures aimed at reaching renegotiation agreements before taking legal action or demanding full payment of the debt.

The regulation establishes special conditions for non-mortgage debtors in a situation of economic vulnerability who are recipients of the minimum subsistence income. In these cases, the lender who sells the doubtful loan to a third party must offer the borrower a payment plan in order to “protect the most indebted groups without undermining the payment culture”.

The Consumer Credit Law also introduces a limit on the amount of default interest that can be charged in the event of non-payment by the consumer, setting it at a maximum of the sum of ordinary interest plus three percentage points.

In addition, charges for the recovery of overdue amounts must be in line with the costs actually borne by the creditor and, in any event, after prior notification to the consumer, indicating the outstanding amount, the time available to settle the situation and the amount to be paid if the situation is not settled.

The cases of modification of the interest rate in contracts of indefinite duration (as in the case of revolving cards) are defined, allowing the customer not to accept the increases or to cancel the contract, in which case the customer may repay the outstanding debt in accordance with the repayment conditions and the interest rate in force at the time of the notification, at no additional cost to the borrower.

Finally, it clarifies the conditions of compensation for early repayment in the case of financing linked to the purchase of goods or services.

Original Story: MSN News Author: Europa Press
Edition and translation: Prime Yield