NPL&REO News

BPI puts NPL ‘Zinc’ portfolio up for sale

Portugal’s BPI has put another non-performing loan (NPL) portfolio up for sale, appointing KPMG as advisor.

The “Zinc” project consists of 99.8 million euros of NPLs, of which 77 million are unsecured and the remaining 22 million are considered risky but secured. This portfolio comprises NPLs from households (66%) and SMEs (34%) and is divided into two tranches.

 Tranche A is divided between households (58 per cent), SMEs (26 per cent) and insolvent SMEs (16 per cent). Tranche B, on the other hand, mainly concerns private borrowers with mortgage loans (93 per cent).7 The portfolio is quite granular, with an average loan size of around EUR 13.7 thousand. The private segment in tranche A has an average loan size of around EUR 7.3 thousand. Tranche B is secured by a number of real estate guarantees with a real estate value from the seller of around 37.6 million euros, 99% of which is classified as first lien.

The Bank has opened the non-vincible bidding for the month of April and expects to complete the sale process by mid-year.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield
Photo: jakub-zerdzick / Unsplashed

Greece

doValue wins new €500 million servicing mandate in Greece

doValue Greece has been awarded a new servicing mandate by funds managed by Fortress Investment Group, adding approximately €500 million in GBV.

“This mandate reflects the high level of costumer satisfaction achieved by doValue Greece, as well as the continued strategic value of doValue’s partnership woth Fortress”, says the statement released by the servicer group.

Additionally, this mandate marks further progress in the positive path since the start of the year, as the group reaches €7 billion GBV from new business compared to a target of €8 billion for the entire 2025 as outlined in the 2024-2026 business plan.

Original Story: doValue
Edition: Prime Yield

Cajamar sells 14.2 million in foreclosed assets to KKR

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

Athens David Tip for Unsplashed

Thousands of debtors with NPL off the radar

Despite efforts to tackle Greece’s mounting private debt – now totaling €89 billion – millions of borrowers remain off the radar, making regulation and recovery more difficult, industry leaders warned at the 10th Delphi Economic Forum.

Tasos Panousis, CEO of loan servicer doValue, revealed that while the company manages 1 million clients, it only has complete data on half of them. Without visibility, it’s harder to regulate and recover debts, he noted.

The issue spans the broader industry. Thodoris Athanasopoulos, CEO of Cepal Greece and President of the Association of Loan and Credit Claims Management Companies (EEDADP), said that out of 2.7 million debtors managed by servicers, only 57,000 have signed up on online platforms designed to give them access to their debt and credit information.

Of these 2.7 million debtors, around 600,000 are tied to a state-supported securitization scheme. Another 1.5 million are borrowers whose non-performing loans have been sold off to funds, while the remainder still have non-performing loans held directly by banks.

Panousis expressed confidence in the state-backed securitization program, noting that five out of seven loan bundles managed by doValue are exceeding expectations. The two underperforming portfolios involve around 100,000 borrowers whose settled loans were supposed to return to banks – a step that has not happened yet.

This return would boost bank revenues and help borrowers regain access to credit, he explained, urging quick action on viable debt settlements to prevent the cost from falling on taxpayers.

Currently, an estimated 700,000 properties are linked to non-performing loans. Only 13,000 of these have so far come into the ownership of loan management funds. Panousis emphasized the importance of avoiding property auctions, calling them “costly and time-consuming,” and urging instead for consensual solutions to be reached directly with borrowers.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield
Photo: David Tip / Unsplashed

KKR in Talks With Pollen Street on Spain’s Hipoges

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

BCP sells €80 million in NPLs to Hoist Capital

BCP has already closed the sale of its non-performing loan (NPL) portfolio, dubbed ‘Project Bright’.The winner was Hoist Capital, which was competing against the consortium of LX Partners and Balbec; EOS Partners; and LC Partners.

Jornal Económico understands that Hoist paid 16.5 million for the Non-Performing Loans portfolio, a portfolio with a nominal value of 80 million euros and made up of ‘unsecured’ credit, i.e. without real guarantees. This usually translates into heavily discounted operations.

These sales are aimed at cleaning up the balance sheet of problematic assets that weigh on the bank’s capital. BCP reached the end of 2024 with 134 million euros less in loans classified as Non-performing exposures (NPE) in domestic activity, closing the year with 973 million in non-performing loans, of which 373 million are loans in default for more than 90 days. The bank led by Miguel Maya has 90 per cent of its loans in Portugal classified as NPE covered by impairments.

In terms of real estate received for credit recovery, BCP reported that it fell from a (gross) value of 169 million euros in December 2023 to 92 million in 2024.

BCP sold 569 properties last year (compared to 820 in 2023), with a book value of 58 million, for 81 million euros. In other words, the sale value exceeded the book value by 23 million.

The net portfolio of repossessed properties fell by 51.9 per cent between December 2023 and December 2024.

BCP’s NPE ratio in Portugal in 2024 stood at 1.7 per cent.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

doValue on track to hit 2025 target for new business

Italian bad loan manager doValue has reached 80% of its targeted increase in gross loan portfolio for the current year, and it may be able to surpass it, CEO Manuela Franchi said.

The Milan-listed company, whose shareholders include U.S. funds Elliott Investment Management, Fortress and Bain Capital Credit, announced it had secured a new contract in Cyprus to recover impaired loans worth around 350 million euros secured against nearly 1,000 properties.

The deal, which follows a 700 million euro with the National Bank of Greece, brings to 6.5 billion euros the new business the company has secured so far this year, helped by its expansion into other southern European markets, including Spain.

“We fully confirm our 2025 target of 8 billion euros in additional gross book value,” Franchi said in comments to Reuters. “If the current trend continues, we don’t rule out even surpassing it in the first part of the year.”

By shedding some 290 billion euros in soured loans since 2016 Italian banks turned the country into Europe’s biggest market for these assets. However, new flows have dried up in recent years as lenders completed their clean-up and tightened lending.

“We believe our geographical diversification will allow us to keep signing new contracts on a regular basis,” Franchi said.

The group has weathered the market slowdown thanks to selective acquisitions and a decision not to invest directly in loan portfolios, but to focus solely on managing them, she said.

Europe’s biggest loan collector Intrum, pushed to the brink by debt costs as interest rates spiked, last year filed for U.S. creditor protection as it sought to restructure its debt.

Unlike doValue, Intrum bought part of the loans it managed.

Seeking to buttress profits as the industry reorganises after the boom years, doValue last year struck a cash-and-share deal to buy Elliott-backed Gardant, a smaller domestic rival.

Cost savings through tie-ups and revenue diversification are seen as a way for the sector to shield profits.

“We look with interest at continental Europe, an area where we are not present but which may offer growth opportunities given the slowing economy and our strong track record,” Franchi said.

Original Story: Reuters
Edition: Prime Yield

NPL pile

Santander, CaixaBank and Sabadell sell 3.7 billion in unpaid loans

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

Portugal flag

Banking profits in Portugal rise 13 per cent to record 6.3 billion in 2024

Fewer costs and bad debts, more profits and deposits: that’s how 2024 looked for Portuguese banks. Not everything was positive: the transformation ratio fell again.

Bank profits in Portugal rose by 13 per cent to a record €6.323 billion in 2024, a year marked by the reversal of interest rates, according to the latest data published by the Bank of Portugal.

At the end of last year, the Portuguese banking system had a return on equity (ROE) of 15.2 per cent, 0.4 percentage points higher than in 2023.

Several factors contributed to the Portuguese banking system’s historic profit last year, including income from interest and commissions, but also the release of provisions and impairments, among others.

On the other hand, banks kept costs relatively under control, with the cost-income ratio rising slightly to 39.7 per cent, 2.7 percentage points higher than a year earlier, but almost 20 percentage points below the level recorded in 2020.

In terms of asset quality, the non-performing loan (NPL) ratio fell again to 2.4 percent in December, 0.3 percentage point lower than a year earlier.

Nevertheless, banks’ balance sheets still contained €7.8 billion euro of NPL, 700 million less than a year ago. Toxic loans net of provisions totalled 3.48 billion.

Indicators for the Portuguese banking system also show that although banks’ total assets grew from 442.2 billion in 2023 to 467.8 billion in 2024, the weight of banks’ assets in relation to GDP fell slightly to 164.2 per cent.

Customer deposits accounted for 73.9 per cent of banks’ assets, up 1 percentage point year-on-year.

The banks’ transformation ratio fell again, reflecting the challenges for banks to inject liquidity into the economy in the form of loans, falling from 78 per cent in 2023 to 75 per cent last year.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

Hipoges and KKR launch 100 million fund to invest in mortgage debt

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

DoValue signs €0.7bn securitisation servicing deal with NBG

DoValue has signed a new agreement with the National Bank of Greece (NBG) to act as servicer for a €0.7bn gross book value non-performing loan (NPL) portfolio to be securitised.

Under this Frontier II project, NBG has entered into a definitive agreement with funds managed by Bracebridge Capital for the sale of 95% of the mezzanine and junior notes.

DoValue Greece will act as the sole and exclusive servicer for the portfolio, which consists mainly of secured NPLs, and will also provide REO services.

The agreement is subject to the completion of the securitisation process of the portfolio by NBG under the Hellenic Asset Protection Scheme (HAPS), which is expected to be completed in the second quarter of 2025.

With this new mandate, DoValue noted that it has achieved €6.1 billion of gross book value from new business since the beginning of the year, exceeding its target of €6 billion for new mandates and reaching more than 75% of the target of total gross book value from new business for the full year 2025.

Original Story: Market Screener | Author: Reuters
Edition: Prime Yield

Gruas

Sareb halts the sale of houses in order to begin their transfer to the Sepes

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

Acropolis tourism of greece

Servicers’ loans up by 3.97 bn euros in Q4 2024

The nominal value of loans to the domestic private sector serviced by domestic credit servicers and transferred to non-resident specialised financial institutions increased by €3.97 billion, the Bank of Greece said. They reached a total value of 74.75 billion euros at the end of the fourth quarter of 2024.

The nominal value of serviced corporate loans increased to 25.51 billion euros in the fourth quarter of 2024, from 23.15 billion euros in the previous quarter.

Original Story: Ekathimerini
Edition: Prime Yield

Moody’s upgrades Greece to investment grade on strong fiscal recovery and stability

Global ratings agency Moody’s has upgraded Greece’s rating to “Baa3” from “Ba1”, citing quicker-than-expected improvement in public finances and the country’s greater resilience to potential future shocks.

“Based on the government’s policy stance, institutional improvements that are bearing fruit, and a stable political environment, we expect Greece to continue to run substantial primary surpluses, which will steadily decrease its high debt burden,” Moody’s said in a statement.

Since 2020, the nation’s debt – the highest in the eurozone – has shrunk by more than 40 percentage points, reaching 154% of its gross domestic product in 2024, and is projected to drop further by the end of this year.

Greek banks are steadying and returning to profit after being nationalized following the 2009 financial meltdown caused by the country’s debt crisis, which put them in a vulnerable position, requiring several capital injections from the government.

Last week, Morningstar DBRS upgraded Greece’s credit rating to “BBB” from “BBB low”, two notches above the investment grade, citing a healthier banking sector and the continued reduction in the country’s general government debt ratio.

The agency also revised Greece’s outlook to “stable” from “positive”, reflecting a balance between persistent credit challenges that are slow to improve and the country’s institutional stability, which supports positive prospects.

Prime Minister Kyriakos Mitsotakis said in a post on the social media: “Moody’s upgrade of Greece to Baa3 marks the final step in restoring our investment grade by all major rating agencies, highlighting Greece’s significant progress. We remain fully committed to reforms that attract investment, create jobs, and drive sustainable growth.”

Original Story: Ekathimerini
Photo: Moody’s
Edition: Prime Yield

Old Lisbon river view

Banks to sell EUR 300 million NPL portfolios

In the first quarter of the year, the sale of impaired banking assets is in full swing. At present, assets totalling around €300 million, including nonperforming loans (NPL) and real estate used as collateral, are on the market. This figure is the sum of BCP’s €80 million in NPL, BPI’s €99.8 million in NPL  (part of which is secured by real estate) and the  Zip Project’s 670properties put up for sale by Quest Capital, led by Carlos Vasconcellos Cruz, which manages the portfolio, with an initial valuation of €120 million.

Four parties interested in BCP’s Bright portfolioBCP has four funds interested in its NPL portfolio known as ‘Project Bright’.
The portfolio is worth €80 million and consists of ‘unsecured’ loans, i.e. without any real guarantees. This means that the operations are usually carried out at a large discount.

According to Jornal Económico, there are four binding bids for BCP’s NPL portfolio. In the running are the LX Partners and Balbec consortium, EOS Partners, Hoist Capital and LC Partners.

For its part, BPI has just launched ‘Project Zinc’ with 99.8 million in NPLs (which includes guaranteed real estate in part of the portfolio), of which 22.4 million are guaranteed.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

NPL ratio falls for fourth consecutive year to end 2024 at 3.32%, lowest level since 2008

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

Law on sale of NPL faces new delay due to political crisis

The process of transposing the European directive to regulate the sale of non-performing loans, including mortgages and consumer loans in default, continues to be delayed. The bill, which reached Parliament last week, was sent directly to the Committee on Budget, Finance and Public Administration (COFAP), but no date has been set for its discussion.

Parliament’s attention is currently focused on the motion of confidence in the government, which will be debated and voted on this Tuesday and which, given the opposition expressed by several parties, could lead to the fall of the executive and the dissolution of the Assembly of the Republic. If this scenario materialises, the regime for the sale of bad or non-performing loans (NPLs), which should have been implemented by 29 December 2023, will remain suspended, leaving consumers without adequate legal protection, warns Público.

Delays in implementation have already led the European Union to take Portugal, along with other member states, to the European Court of Justice.

Original story: Executive Digest | Author: Pedro Zagacho Gonçalves
Edition and translation: Prime Yield

Consumer Credit

NPL ratio of credit institutions fall below 6% in December, returning to pre-crisis levels

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

Bill to regulate the buying and selling of bad debts approved

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

Banks and servicers return 5,000 assets to residential market

Banks and real estate companies that manage properties from auctions (REOCOs) are prioritizing properties in their portfolios that are eligible for the “My Home II” program in order to increase the supply on the market, as well as avoid the doubling of the Single Property Tax (ENFIA) that comes into force next year.

Based on estimates, this concerns  5,000 properties that meet the characteristics provided for by the program: Tthey have been built until 2007, their area is up to 150 sqm. and their commercial value does not exceed EUR 250,000. Of these, those that are mature for sale do not exceed 1,500-2,000 and the goal is to quickly mature the rest in order for them to return to the market.

Finding the right property is the main problem faced by those interested in applying for “My Home II”. As the latest data show, applications to banks have already reached 20,000 and to date the number of entrants in the program is approximately 500.

It should be noted that in order to be eligible for the program, one must have found the property for which they are applying for a loan about, and the low number in relation to the volume of applications at the banks confirms the significant deficit that exists in the housing market, especially in Attica.

The application requires that the properties the interested parties have found have an electronic identity for the loan process to proceed, provided that the prospective borrower meets the bank’s credit criteria.

According to data from banks, 10% of prospective borrowers declare that they have found the property, raising the number of those who can join immediately based on the applications to date to close to 2,000. The interest rate of the program is based on Euribor – currently close to 2.5% –, on which the margin charged by each bank is applied and which is formed on average at 1.5%. Given that 50% of the interest rate is subsidized, the final interest rate is close to 2%.

Banks and companies that manage properties that have come into their ownership after auctions due to debts from bad loans have every reason to promote the stock of these properties, in order to, on the one hand, limit the shortage of supply in the market and, on the other hand, to avoid paying double ENFIA from 2026. The doubling of ENFIA was imposed by the recent law on bank charges and concerns all properties that they will own at the end of 2025 and have not been rented.

Original Story: Ekathimerini | Author: Evgenia Tzortzi | DATE: 13/02/2025
Edition: Prime Yield

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