Portuguese banks’ NPL could reach 9% with end of moratoriums

Moody’s has a negative outlook on Portuguese banking. And it is concerned about the impact that the end of moratoria may have on asset quality. The rating agency anticipates an increase in non-performing loans this year and a fall in results due to the growth in provisions. And it warns that Novo Banco could be an additional burden.

“We have a negative outlook for the Portuguese banking sector, in line with several other European countries. What this negative outlook wants to reflect is the high uncertainty in the operating environment that could translate into weaker banking fundamentals,” explained Pepa Mori, vice president and senior credit officer for European banking at Moody’s, at a digital conference on Portugal organised by the agency on Wednesday.

“Our main concern regarding Portuguese banking is that the improvement in banks’ asset quality that took place in 2020 will suffer a sharp reversal as the government’s measures to support debtors – such as guaranteed credit lines or credit moratoria – start to disappear,” he warned.

Currently 22 per cent of financial institutions’ portfolios are under moratoria, a regime that is in force at least until September this year, with a further extension not ruled out. Only then will it be possible to see the impact of these measures on banking, but Moody’s estimates are that the non-performingloans (NPL) ratio will rise to 9% this year, from 5.5% at the end of last year.

In addition to the impact on asset quality, the worsening of non-performing loans will also force an increase in provisions to cover possible losses, which further reduces net income (already squeezed by the impact of the pandemic on financial margins).

On the one hand, Pepa Mori recalled that “Portuguese banks entered the crisis stronger than in the previous financial crisis”, which is “very important” in terms of capital and liquidity. “Portuguese banks compare positively with European ones,” he stresses.

Original Story: ECO | Leonor Mateus Ferreira
Photo: Photo by Ricardo Gurgel in
Edition & Translation: Prime Yield

Funds target the end of 2021 to reactivate large purchases of toxic assets

What comes in on the one hand, has to be ‘drained’ on the other. The expected increase in defaults in the coming months is forcing banks to reactivate the configuration of portfolios of new distressed loans created during the crisis. An operation that was practically paralyzed in the first half of 2020 and which the large funds do not expect to resume until the end of this year.

This is explained by various entities consulted by Invertia, protagonists in this type of operation, which have been making room for months to deal with the arrival of these new assets over the coming months. Experts rule out an avalanche as in the previous financial crisis but, without doubt, there will be foreclosures and executions that will swell these portfolios. And they will have to be disposed of as soon as possible.

“For the time being, we expect to see transactions involving the sale and purchase of assets such as mortgage debt in excess of hundreds of millions of euros, but this is a far cry from the billions that were seen in the past,” explain a national financial institution.

It seems logical. The mergers that will be completed during the course of this year will create larger portfolios from the last quarter onwards, which may be of greater interest to the large funds involved in these operations. This will also coincide in time with greater pressure on the banking sector in terms of non-performing loans.

Although banks rule out double-digit growth in NPLs, as the worst predictions suggested just a few months ago, it is necessary to prepare the exit of these new ‘toxic’ assets to avoid undoing the path taken in recent years, in which the cleaning up of the balance sheet has been key for the sector to reach this new crisis on a sound footing.

Especially after the last quarter in which a strong upturn in loans in the so-called ‘stage 2’ (under special surveillance) has been detected. “As a leading indicator of default, we expect that some of these credits end up appearing as bad debts,” warn Axesor Rating in a recent analysis.

They also point to the gross inflow of bad loans in some banks during the last quarter of the year. But this has not led to a deterioration in the average NPL ratio due, precisely, “to the sale of failed portfolios that has offset this effect or the greater increase in the denominator, i.e. loans versus doubtful assets”.

Original Story: Invertia (El Espanol) | Clara Alba
Photo:Photo by Xexo Xeperti from FreeImages
Edition & Translation: Prime Yield

Banks have €28.4 billion of loans on ice

Banks and servicers are in a race against time to reach settlement agreements over nonperforming loans (NPL) and suspended loan tranches in a bid to stem the impact of the pandemic crisis, according to Finance Ministry data. The data show that the loans on ice amounted to €28.4 billion at end-2020, while the debts on which a settlement deal had been reached with lenders and NPL management companies added up to €21.2 billion.

From March to December 2020, repayments of a total of 405,473 loans were suspended for up to nine months, a measure that ends on March.

From July 2019 to December 2020, settlement deals for 396,621 loans (mortgage, consumer and corporate) were reached with banks and servicers.In the context of the Gefyra program for the protection of borrowers’ main residences, the state subsidized the repayment tranches of 110,037 loans of 69,443 borrowers up to end-January, disbursing €47.9 million. Applications submitted up to the end-October deadline numbered 160,477, with 74,420 already approved by end-December.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Markellos P. from FreeImages
Edition: Prime Yield

National Bank applies to join Hercules bad loan scheme

National Bank (NBG), one of Greece’s four largest lenders, has applied to take part in the government’s Hercules bad loan reduction scheme and securitise a € 6.1 billion portfolio of impaired loans, it said.

Banks in Greece have been working to reduce a pile of about €70 billion in bad loans, the legacy of a financial crisis that shrank the country’s economy by a quarter. Shedding the bad debt is crucial to their ability to lend and shore up profits.

The Hercules asset protection scheme (HAPS) was put in place to help banks offload up to €30 billion of bad loans.

Under Hercules, banks can apply for a government guarantee on the senior tranche of an NPL securitisation as long as that tranche is structured to a minimum Double B minus credit rating and they sell the majority of the mezzanine and junior notes.

NBG said applying to include its ‘Frontier’ bad loans portfolio in the Hercules scheme will fetch a Greek state guarantee for senior notes of up to €3.31 billion. The guarantee would give the senior notes a zero risk-weighting.

Original Story: Reuters/Ekathimerini
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

Spain’s largest banks piles €159 bilion credits at risk of default

Spain’s six larger banks (Santander, BBVA, CaixaBank, Sabadell, Bankia and Bankinter) accumulate €159 billion in loans and credit lines at risk of default, a pile that has risen by about 20% in the last quarter of the year alone and that is classified under special surveillance. 

This amount represents 8% of their portfolio and stands out as one of the key threats for the accounts of the next two years.

Although the banking sector isn’t yet recording an increase in insolvencies due to the health crisis, due to the moratoriums and the facilities of ICO financing, most of the sector experts consider that throughout 2021 the delinquencies will begin to escalate, especially in the sectors most affected by activity restrictions -tourism, leisure, restaurants and transport, mainly-, but also in consumption and, more residually, in the mortgage segment.

Amid the country’s banking industry, the most significant rise in nonperforming loans (NPL) is expected to occur until the end of 2022, although some bankers, such as CaixaBank CEO, considers that the peak will occur at the end of this year. Against this backdrop, most banks have been accumulating provisions to face these potential losses. However, in the second semester of 2020 their extraordinary provisions have decreased compared to the piggy bank make in the first half, due to the aim of offering better income statements and profitability, despite the slap on the wrist from the Bank of Spain due to the slowdown in endowments.

In total, they have reserved slightly more than €25 billion against the income statement between the extraordinary item for the pandemic and for the regular entry of insolvencies, which is more than double than in 2019. 

Original Story: El Economista |Fernando Tadeo 
Photo: Photo by Victor Iglesias from FreeImages
Translation & Edition:
 Prime Yield

BPI sells a €300 Mn NPL portfolio to LX Partners

Portuguese private bank BPI has just sold a nonperforming loans (NPL) portfolio to the LX Partners fund. The named “Project Lime” includes 30,000 credit contracts, with a gross book value of €300 million.

According to official sources from the bank, the deal was completed in January 27th , and comprises about 30,000 unsecured credit contracts, the same is saying that these loans have no collateral associated. 

Original Story: ECO |News
Photo: BPI Facebook
Translation & Edition: Prime Yield

Tikehau and Albatroz are about to complete the acquisition of Project ZIP

The joint venture between the funds Tikehau and Albatross is about to complete the acquisition of Project ZIP, agreeing to pay 320 million euros to take the portfolio comprising 4,400 houses owned by several Portuguese banks.

Funds Tikehau and Albatross left behind Cerberus, which was also part of the short list of candidates invited to present binding offers for the purchase of this portfolio, placed on sale in July. The two funds selected will now start the last negotiation stage for the conclusion of the operation, which should take place by the end of March.

According to sources close to the deal consulted by Eco, «the two funds offered a super-competitive bid. It is a great sign for the Portuguese market and for other potential sellers».

This Consortium should acquire Project Zip for an amount between 300 and 320 million euro, less than the 360 million euro the project was estimated at.

It should be recalled that this project includes 4.435 housing units, most of them already with tenants, located mainly in the urban centres of Porto, Lisbon and Setubal. The buildings are part of several real estate investment funds for housing rental (FIIAH) managed by Norfin and owned by several banks, amongst which Novo Banco, CGD, Montepio, Millennium bcp and Santander Totta.

90% of these buildings are rented. Projetec Zip currently generates 14.6 million euro in annual revenues, which could increase to 25.8 million euro, according to the same source.

Original Story: Iberian Property |Ana Tavares
Photo: Photo by Svilen Milev, in
Edition & Translation: Prime Yield  

Greek banks loans subject to COVID-19 repayment relief hit $37 billion

Greek banks deferred repayments on €30 billion worth of loans last year to help borrowers cope with the financial fallout of the COVID-19 pandemic.

According to the country’s banking association, lenders granted payment deferrals to about 400,000 individuals and businesses between January and November.

The amount of loans under payment deferrals raises concerns that a chunk may become impaired when the period of grace ends, inflating the load of bad debt on banks’ balance sheets.

The European Banking Authority said in December that a deferral period cannot exceed nine months, from the time a loan is placed under deferral status.

In December, Greek’s central bank governor projected that banks were likely to be burdened by €8-10 billion of new impaired loans as a result of the pandemic.

Banks had already been working to reduce a mountain of impaired credit, the legacy of a 10-year financial crisis that shrank the country’s economy by a quarter.

Despite the reduction of non-performing loans (NPLs) by about €59 billion from a peak of 106 billion in March 2016, banks’ overall NPL ratio of 36% at the end of September remains far above the euro zone average of 2.9%.

The €30 billio of loans under payment moratoria does not include another 15 billion of mortgages and consumer and business loans already restructured, meaning banks have offered relief for €45 billion of loans in total, their association said.

Original Story: Reuters | George Georgiopoulo 
Photo: Photo by Jonte Remos from FreeImages
Edition: Prime Yield

BBVA sells a €700 million real estate loans and asset portfolio to KKR

BBVA announced the close of an agreement with global investment fund company KKR – primarily through its KKR Private Credit Opportunities Partners III fund – to transfer the ownership of a real estate loan and asset portfolio from Unnim with a gross value of approximately €700 million.

Dubbed “Dakar”, the portfolio consists of two types of real estate loans (with and without mortgage guarantees) and REOs (Real Estate Owned) assets.

Over the past three years, BBVA has completed several loan portfolio sale transactions, mostly real estate and mortgage loans. In December 2019, the Spanish bank completed its two largest sales of written-off loan portfolios: Project “Juno”, a portfolio with a gross value of approximately €2.5 billion, and the “Hera” portfolio, comprised of loans to small and medium sized enterprises (SMEs) with an approximate gross value of €2.1 billion.

Before, in December 2018 the bank completed the sale of  the €1.2 billion portfolio “agora” primarly consisting of mortgages (both non-performing and in default loans). In June 2018, BBVA sold a property development loan portfolio worth €1 billion called “Sintra” and in July 2017 it sold another portfolio of loans to developers with a gross value of around €600 million, known as Project “Jaipur”.

Furthermore, in October 2018 BBVA completed the transfer of its real estate business in Spain to Cerberus Capital Management. The closing of the transaction resulted in the sale of Cerberus of an 80% stake in Divarian, the company created to transfer the real estate portfolio. BBVA retained the remaining 20% stake.

Original Story: BBVA
Photo: BBVA site
Edition: Prime Yield

Banks under pressure: DBRS leaves a warning to Portugal

The European banking business will continue under strong pressure in 2021. Despite the expected economic recovery, the burden of non-performing loans will weigh heavily on the financial institutions in 2021, according to the Canadian rating agency DBRS, which points especially to countries like Portugal, Spain and Italy.

“The outlook for European banks remains challenging in 2021. We expect the revenue pressure banks faced in 2020 to continue in 2021,” says the DBRS report released this Thursday. “Given the tough revenue environment and low returns, reducing operating costs remain a clear priority, and the pressure to improve returns is likely to lead to further domestic consolidation in some countries.”

The pandemic generated a deep economic crisis, which has not yet materialised in a worsening of non-performing loans (NPLs) due to government support measures such as moratoria and credit lines with state guarantees. “Nonetheless, it is clear that loan losses will increase when government support ends. The trajectory of NPLs will remain a function of the length of economic restrictions, overall economic impact, as well as any additional support measures,” the agency warns.

The latest available data refers to the first nine months of 2020, and the DBRS analysis (which included 40 European banks, namely two Portuguese banks: Caixa Geral de Depósitos and BCP) indicates that there has already been an increase in NPL levels in Norway, Germany and the Netherlands mainly due to very low bases.

However, these are not the countries most at risk. “Banks in Portugal, Italy and Spain continued to reduce NPLs in 9M 2020, however, these countries still hold high levels of NPLs and have high NPL ratios relative to other European banks and above the average of the sample,” the agency notes. “There has been a large proportion of borrowers resuming payments after the end of the moratoria. But the capacity of borrowers to make payments depends on the economic shock experienced in each country.”

The beginning of 2021 arrived with new lockdowns in a number of European countries, including Portugal, so the economic impact of the pandemic is still uncertain. The extent of the restrictions will impact asset quality and the cost of risk in 2021.

“Capital levels remained solid in spite of weaker earnings. However, we expect the deterioration of asset quality in 2021 to trigger an increase in risk-weighted assets. In addition, internal capital generation could reduce given lower earnings and the resumption of dividends payment,” DBRS adds.

Original Story: ECO News
Photo: Photo by Sergey Klimkin in

CarVal buys a €250 million refinanced mortgage portfolio from Abanca

Abanca, the bank chaired by Juan Carlos Escotet, was the protagonist of the last banking operation in 2020 and the first in 2021. In addition to the first issue of subordinated bonds (AT1) this year, announced last week, an agreement was reached in extremis in 2020: the sale of a portfolio of 250 million in refinanced mortgages to the US fund CarVal Investors, according to financial sources consulted by El Confidencial.

Neither Abanca nor CarVal made any comments. This operation is one of those that were negotiated in the last days of 2020 with the aim of having it count in that year’s accounts, which will be presented in the coming weeks. Abanca put this portfolio up for sale in the middle of last year, in a competitive process known as the Eume Project. The sources consulted point out that there were moments when it seemed that the operation would not be successful, due to all the uncertainties that have existed on the mortgage market during 2020: pandemic, real estate prospects, regulation, court rulings and squatting.

The credits included in the Eume Project are up to date, although with some delays during the last 12 months. This type of refinanced loan is usually included within the ‘Stage 2’ fixed by the European Central Bank (ECB), for normal risk under special surveillance, which requires the institutions to advance losses. This factor, together with the possible deterioration of these mortgages due to the covid-19 crisis, led Abanca to accelerate their sale last year. In June, the Galician entity had real estate loans -with some kind of collateral linked to bricks- for a value of 18,850 million, of which 461 million were under special surveillance and 625 million were in doubt. Abanca’s default rate is 2.6%, one of the lowest in Spain, with higher figures for SMEs and the self-employed (5%) and consumer loans (4%).

Original Story: El Confidencial | Jorge Zuloaga
Photo: ABanca website
Translation/Edition/Summary/Adaptation: Prime Yield

Bank of Greece warns: new NPLs could go up to €10 bn

The burden of new nonperforming loans on Greek banks after the pandemic crisis is expected to come to 8-10 billion euros, relatively greater compared to that faced by other European credit institutions, Bank of Greece Governor Yannis Stournaras said recently.

Addressing the 8th Banking Forum, Stournaras said that Greek banks, already burdened with a high stock of NPLs, will face an even heavier burden in the future since they have exhausted the greater part – if not the entirety of – their capital reserves to deal with them. 

The central banker noted that despite the fact that Greek banks have managed to reduce their NPLs by around €50 billion since their peak in March 2016, they remain at very high levels (35.8% in September 2020), significantly above the EU average.

Stournaras stressed that Greek banks enjoy a satisfactory capital adequacy rate; however, this will be negatively affected by expected developments such as the implementation of IFRS 9 standards, the cost of securitizations of NPLs and the low quality of capital.

For these reasons, Stournaras reiterated the need for the creation of a so-called “bad bank,” to operate in parallel with the Hercules state guarantee scheme. 

His proposal, he said, would deal with the problem of deferred taxation as well and could lead to a further reduction of NPLs by €40 billion.

He asserted that the cost of this bad bank will be covered exclusively by banks.

Original Story: Ekathimerini | Business
Photo: Bank of Greece Site
Edition/Summary/Adaption: Prime Yield

Whitestar closes purchase of a NPL portfolio to BCP

BCP bank has closed the sale of a NPL portfolio, called “Projeto Webb”, to the consortium Group Arrow/Christofferson, Robb & Company (CRC) confirmed Whitestar Asset Solutions, a company of the Arrow Group specialized in the management of credit portfolios (NPL) and real estate.

This is a more granular portfolio whose initial value was 450 million euros, but which has been adjusted to 270 million euros.

With this transaction, in addition to the purchase of the NPL portfolio from the Novo Banco, named “Carter”, announced in December, Whitestar Asset Solutions now manages over 9 billion euros in assets.

Novo Banco sold in December a portfolio of unproductive assets with a gross book value of 79 million euros for about 37 million. This was a portfolio made up of small secured and unsecured loans, i.e. it includes both collateral and non-collateralised loan contracts.

The “Carter” operation, unlike others over the past two years, does not include assets covered by the Contingent Capitalisation Facility under the Resolution Fund.

In all, in 2020 Whitestar won the management of four portfolios of NPLs (bad loans). After winning the management of two portfolios of NPLs sold by Santander (BST52 and 53), Whitestar confirms that in December, in two competitive processes, Arrow Global’s fund (sole shareholder of the company led in Portugal by João Bugalho) won the tender for the purchase of two portfolios of unproductive assets, in consortium with Christofferson, Robb & Company (CRC). The first portfolio, the Webb portfolio, originated by BCP, has a total of 270 million euros in debt, while Carter, originated from Novo Banco, has 92 million euros in debt.

The market for the sale of problem assets remains active. The Novo Banco, for example, is in the process of selling the “Wilkinson Project” portfolio, worth 200 million. Eco reported that Davidson Kempner, Atena Equity Partners (in consortium with Blantyre), and Bank of America Merrill Lynch moved into the second phase. The market expects the financial institution to launch a new portfolio in the market earlier this year.

BCP has yet to close the sale of the “Ellis” portfolio, having been chosen as the buyer, according to Eco, the management company Davidson Kempner. Initially, the “Ellis Project” had a value of 300 million euros, but with the withdrawal of some credits the value of the portfolio was reduced to about 170 million, Eco also advanced.

Original Story: O Jornal Económico | Maria Teixeira Alves
Photo: Millennium bcp website
Edition/Summary: Prime Yield

Banco Sabadell sells a portfolio of distressed assets to KKR for €130 million

Banco Sabadell has sold a portfolio of distressed assets from CAM to the US investment firm KKR for around EUR 130 million.

The sale, which was signed a few days ago, relates to the so-called “Aurora project”, with a book value of approximately EUR 500 million, according to sources close to the transaction, which were advised by Deloitte.

Bain Capital has also participated in the final bid for this portfolio, integrated by the Alicante entity’s toxic assets, which Sabadell assumed in 2011 after a bailout of the Deposit Guarantee Fund (FGD).

Nine years later, the bank presided over by Josep Oliu has managed to divest itself of the portfolio, thus concluding the Asset Protection Scheme (EPA) which it received in exchange for keeping the fund.

This sale also allows Sabadell to continue cleaning up its balance sheet, now that the merger negotiations with BBVA have failed and the group of Catalan origin wants to continue on its own and with a new management, led by César González-Bueno, who will take over from Jaume Guardiola as chief executive.

This is the second operation of this type closed by Banco Sabadell this year, after it signed the sale of a portfolio of non-performing loans to the management company Tilden Park for some 65 million euros just a few days ago.

Original Story: EFE/Expansión
Photo: Sabadell Bank site
Translation: Prime Yield

Attica Bank announces the securitization of two NPL portfolios

The Greek bank Attica has announced on late december that, following a resolution of the Board of Directors meeting of 30th November 2020, proceeded to the securitization and transfer of two portfolios of non-performing loans, totalling €712 million.

The bank transferred a portfolio of non-performing corporate loans/credits of a total amount of approx. €340.8 million to a special purpose vehicle (SPV) under the name “Astir NPL Finance 2020-1 Designated Activity Company» based in Ireland. Furthermore, the SPV issued and transferred to the Bank a Class A bond of nominal value of €159,000,000 (Senior Note), a Class B bond of nominal value €1,806,000 million (Mezzanine Note) and a Class C bond (Junior Note) of nominal value of €180,000,000. The bonds derive from the securitization of the above loan portfolio.

Attica also transferred a portfolio of non-performing retail loans/credits of a total amount of approx. €371.2 million to a special purpose vehicle (SPV) under the name “Astir NPL Finance 2020-2 Designated Activity Company» based in Ireland. Furthermore, the SPV issued and transferred to the Bank a Class A bond of nominal value of €190,000,000 (Senior Note), a Class B bond of nominal value €104,921,000 million (Mezzanine Note) and a Class C bond (Junior Note) of nominal value of €76,372,000. The bonds derive from the securitization of the above loan portfolio.

Original Story/source: Aticca Bank
Photo: Attica Bank Linked In
Edition/Summary/Adaptation: Prime Yield

Despite 9-month losses, Novo Banco halved its NPL stock up to September

Portugal’s Novo Banco, which emerged from the ruins of the collapsed Banco Espirito Santo, reported a 49% leap in its net loss for January-September to €853 million following provisions to discontinue its business in Spain.

The bank, 75% owned by Lone Star since October 2017 and 25% by the state-backed Portuguese Resolution Fund, said its results were also hit by provisions for bad loans.

The impairments and provisions for the exit from its retail network in Spain and for higher credit risk totalled around €727 million, the bank said, adding it also took a hit of €187.2 million due to the impact of the COVID-19 pandemic.

Earlier this year, sources told Reuters that Novo Banco was looking to sell its loss-making retail network in Spain, seeking to bolster its balance sheet and prevent further losses. The provisions reflect expected losses on any deal.

The bank has already sold assets in France, Asia and Cape Verde.

Novo Banco’s recurrent net income fell 30% to €98 million, but the bank said the results showed its “value-creation capacity and sustainable profitability”.

Net interest income, a measure of earnings on loans minus deposit costs, increased 9.3% to nearly €373 million.

The lender halved its non-performing loans (NPL) to €2.8 billion in September, after it sold problematic asset portfolios, and cut its NPL ratio to 9.7% from 19.9% a year earlier.

Original Story: Reuters |Sérgio Gonçalves 
Photo: Novo Banco website
Edition: Prime Yield

Spain orders banks to extend state-backed loan scheme for another 6 months

Spain ordered banks to comply with a six-month extension of a state-backed loan scheme to June next year, designed to help companies struggling with the impact of the coronavirus pandemic.

Economy minister Nadia Calvino told bank clients who have no overdue payments can request these loans. Banks should also provide these loans with longer maturities and grace periods if customers ask for them, the minister said.

“These measures are aimed at addressing potential solvency problems that may start arising and prevent viable companies from shutting down,” Calvino said.

Spain has already provided €108 billion in state-guaranteed loans to its companies, she said.

With nearly 1.5 million cases and 41,253 deaths from COVID-19, and an economy that relies heavily on tourism, Spain has been one of the countries in Europe hardest-hit by the pandemic.

The International Monetary Fund has said Spain is the euro zone country with the highest take-up of guaranteed loans.

At a regular weekly meeting, the cabinet also approved an extension until March of restrictions on forced bankruptcies of companies affected by the coronavirus pandemic to avoid the so-called cliff effect from the withdrawal of some support measures next year.

Guarantees on the state-backed credit lines, designed to help companies amid the pandemic-induced economic crisis, were extended to up to eight years from the originally planned five on most loans.

An extra year was added to the grace periods, which allow borrowers to delay payment without being charged late fees, being found in default or having their loans cancelled.

Companies had been given until December to apply for the state-guaranteed funding scheme of €140 billion. The grace period on a significant volume of loans ends in April, and many small businesses feared they would not have been able to cope with their payments that soon. 

Original Story: Reuters | Belén Carreño 
Photo: Caixa Bank website
Edition:Prime Yield

Alpha Bank receives 2 binding bids for the €10.6 billion “Galaxy” portfolio

Alpha Bank, Greece’s fourth largest lender, said it had received two binding bids for the sale of a bad loan portfolio worth about €10.6 billion. The transaction will involve a securitisation and also the sale of the bank’s loan servicing platform Cepal.

The portfolio, known as Galaxy, consists of retail loans worth €7.6 billion plus loans to medium-sized and large corporate clients worth €3 billion. The bank did not disclose further details.

Greek banks have been struggling to reduce a pile of bad loans worth about €60 billion, the legacy of a decade-long financial crisis that shrank the country’s economy by a quarter.

Alpha Bank, which is 11% owned by Greece’s bank rescue fund HFSF, wants to reduce its bad loan ratio to 13% of its total loan book.

It reported profit of €97.5 million euros in the second quarter of the year while its non-performing loans stood at 30.2%.

Original Story: Reuters | Reuters Staff 
Photo: Alpha Bank website
Edition: Prime Yield

Millennium bcp’s NPE fell by €1 billion from a year ago

Portugal’s largest listed bank Millennium bcp reported a 46% drop in its nine-month net profit to €146.3 million, dragged down by higher provisions and impairments in the wake of the coronavirus pandemic.

However, its net interest income (NII), a measure of earnings on loans minus deposit costs, was little changed at €1.15 billion from a year ago, the bank said in a statement.

On a positive note, its core net income – NII plus net fees minus operating costs – grew 1% to €835.2 million.

But loan provisions increased 25% to €374.2 million in January-September 2020 from a year ago, while other provisions and impairments skyrocketed 126% to €176.4 million, the lender said.

“We have significantly reinforced impairments in the context of the pandemic. (We’re) adapting the business to the crisis. We have moved from a growth mode to a balance sheet protection mode,” Chief Executive Miguel Maya told a news conference.

Portuguese authorities in March said bank customers could suspend loan repayments, in a move aimed at relieving pressure on businesses and individuals during the pandemic. The moratorium has been extended until September 2021.

Millennium bcp said it had already granted more than 100,000 such loan repayment holidays.

The bank said its non-performing exposures fell by €1 billion from a year ago to 3.6 € billion in September after it sold various problematic asset portfolios.

Millennium bcp, whose main shareholder is China’s Fosun group, said its fully implemented Tier 1 common equity (CET1) capital ratio stood at 12.4%, comfortably above the required 8.8%.

Original Story: Reuters |Sérgio Gonçalves 
Photo: Millennium bcp website
Edition:Prime Yield

BBVA and Sabadell in talks to create Spain’s second-biggest lender

BBVA and smaller rival Sabadell announced they are in talks to create Spain’s second-biggest domestic lender by assets, the latest move in the accelerating consolidation of the Spanish banking sector.

BBVA/Sabadell merger would mark a significant step in this process, coming after Caixabank agreed in September to buy Bankia for €4.3 billion.

If a BBVA/Sabadell deal goes ahead, the new bank would have nearly €600 billion in assets in Spain and a combined market value, Reuters calculations using Refinitiv data showed.

Taking into account both banks’ international businesses, but deducting the upcoming sale of BBVA’s U.S. division, a merged group would have around €860 billion in total assets, still below Santander’s €1.5 trillion global balance sheet.

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

Both BBVA and Sabadell said the talks were ongoing and said no decision had been made on whether a transaction would go ahead.

“The entities have initiated a reciprocal due diligence review process as is customary in this type of transactions and have appointed external advisers,” BBVA said in a stock exchange filing.

“It is noted that no decision has been made in relation to the potential merger transaction and that there is no certainty as to whether any such decision will be made or, if that is the case, as to the terms and conditions of a potential transaction.”

Sabadell’s own statement confirmed the talks and said it had initiated a due diligence process and designated external advisers.

Original Story: Reuters | Jesus Aguado 
Photo: BBVA website
Edition: Prime Yield