Total credit in Greece’s banking system contracted 1.4% year-on-year in January after a
1.3% decline in the previous month, according to the latest data released by the Bank of Greece.
The most sharpen fall was on the public sector segment: -5.9% year-on-year, while in the credit to business and households the contraction was -0.6% compared to the year before.
Original Story: Reuters | Angeliki Koutant
Photo: Photo by Jonte Ramos in FreeImages.com
Edition: Prime Yield
Novo Banco requested a capital injection of €1.037bn in the beggining of March, much of which will be sourced from the Portuguese state.
In the last week of February, Portuguese lender Novo Banco reported its 2019 year-end results, where it showed €1.067bn of losses, a 25% improvement on the previous year. That was the good news.
The bad news was that the bank said it would request €1.037bn from the Portuguese resolution fund (FdR), the country’s public body that supports resolution measures applied by the Bank of Portugal.
However, this was not the first time Novo Banco has asked for the resolution fund to help. The new request, if granted, would bring Novo’s total capital injections from the FdR to €2.978bn since 2017.
The reasons for the injections have their origins in the sale of a 75% stake in the bank to US private equity fund Loan Star in 2017.
Novo Banco was created in 2014, comprising the good bits of Banco Espírito Santo, which entered into resolution that year. The Portuguese state owned it all until Lone Star arrived, keeping 25% after the sale was completed.
A clause in the sale contained a contingent capitalisation agreement (CCA). The CCA would be triggered if certain ratios for the bank fell under particular thresholds, or if the bank registered losses across specified assets, forcing the FdR to inject capital to replenish the bank’s capital ratios. The agreement also stipulated a ceiling of €3.89bn of injections from the FdR.
Original Story: Global Capital |David Freitas
Photo: Novo Banco site
Edition: Prime Yield
Greece’s Piraeus Bank is launching the process for its first nonperforming loan (NPL) portfolio securitization, opening the virtual data rooms to candidate investors in the Phoenix package within March.
Phoenix contains mortgage loans adding up to €2 billion and according to the bank’s plan this will be the first securitization to enter the state’s Hercules asset protection scheme in the context of a broader securitizations program adding up to €7 billion.
The non-binding offers for the Phoenix portfolio are expected next month. Based on the plan, the senior notes to be issued in the context of the securitization – for which the lender will demand state guarantees via Hercules – will come to €900 million. Besides the senior section of the bonds to be issued, which Piraeus will keep on its books, it will also hold onto 5% of the junior notes, offering 95% to candidate buyers.
Piraeus has already commissioned the assessment of the portfolio to an independent firm (DBRS Morningstar), while the start of procedures for the securitization of a second package of NPL, under the name Vega, will be run in parallel. This will include mortgage and corporate loans adding up to €5 billion.
The plan that was announced by the bank’s chief executive officer, Christos Megalou, foresees that the bad loans pile will be reduced from €24 billion in end-2019 to €13 billion in end-2020 and below €8 billion by the end of 2022.
As for its NPL ratio will drop from 49% in end-2019 to 29% in December 2020 and 8% in end-2022.
In absolute figures the two securitizations will cost Piraeus just over €1 billion. In order to avert the increase in the state’s holding, which currently amounts to 26% of Piraeus’ share capital, the lender will follow the model of the separation of banking activity and the creation of a holding company.
The latter will be listed on the stock market and incorporate 100% of the banks’ shares, as well as the mezzanine and the junior notes.
Based on the business plan, the rest of the losses will be covered by the profits to be released from the reduction of provisions and the increase in operating profits.
Original Story: Ekathimerini |Evgenia Tzortzi
Photo: Piraeus Bank site
Edition: Prime Yield
Blackstone and Cerberus are losing money from the residential portfolios acquired from Santander and BBVA, which have generated millionaire losses to the funds. On the contrary, Lonestar, however, is obtaining benefits of €6.4 million from the assets it bought from Caixa Bank.
Quasar Investments, the society established by Blackstone, acquired dwellings, land and non-performing loans from Santander for a net value of €10 billion, in a deal that generated red numbers of €714 million in the last year’s accounts. Santander still co-owns 49% from the company and had recorded losses of €350 million.
The losses shared by Cerberus and BBVA stood around €48 million, even though it wasn’t as pronounced for the entity, since it only holds 20% from Divarian, the jointly created company.
Original Story: EJE Prime | NEWS
Photo: Site Cerberus
Edition & Translation: Prime Yield
With the market stronger than before, the current Iberian real estate cycle will be long term, says the Chief Economist at Spanish investment bank Arcano, Ignacio de la Torre. The reason? Because both countries are not relying on foreign loans.
The responsible was the keynote speaker of the panel «Why Portuguese and Spanish Real Estate Markets will keep rising» at an event organised by the Portuguese Association of Real Estate Investors and Developers (APPII). Dismissing fears of another looming recession or property bubble in the Iberian Peninsula, during its intervention, Ignacio de la Torre explained that both Portugal and Spain are now in a stronger, more balanced situation financially concerning their housing markets than many other countries worldwide.
Arcano’s Chief Economist says that when looking at both housing markeys, many people focus on the returns and how much property goes up. But, too often they forget about the associated risks with returns.
«If you compare both markets before the crisis, house prices were rising sharply but didn’t factor in the risks. Both countries’ systems were servicing huge current account deficits and relied on a lot of debt versus GDP. When you rely on debt over GDP, sooner or later you will create a big problem», he explained.
Looking at both markets today, they are growing in line with available income. In Portugal, wages are growing at around 3% while in Spain at 2.2%, with employment growth at 1% in Portugal and 2% in Spain.
«Risks are critical. Both Portugal and Spain, for the first time in 40 years, are enjoying an equilibrium in their current account balances. We are not building houses relying on German loans. If you analyse how much the total debt-to-GDP growth ratio is, nominally speaking (families + corporations), we have healthy growth (above 1% is dangerous; both were at 3% by 2006). Today both Portugal and Spain have an intensity below 0% which is very healthy,» says the economist.
De la Torre stresses that people and investors are now looking to finance their investments from savings rather than relying on foreign funding. Looking at the private sector in both Spain and Portugal, both corporations and families are saving. The total amount of leverage is coming down, which is healthy.
Original Story: Portugal Resident | Chris Graeme
Photo: Photo by Alfonso Romero in FreeImages.com
Edition: Prime Yield
At least four groups appear to be interested in the acquisition of Piraeus Bank’s loans to Marfin Investment Group (MIG), which add up to almost €550 million.
Sources say that the already known suitors Emma Capital and Comer Group have been joined by a foreign private investment fund, as well as another vehicle belonging to the United Arab Emirates’ state investment fund.
Piraeus is said to deem that the right conditions are now in place for the launch of a tender process for those loans, and decisions to that effect will be made soon, even though international economic conditions due to the coronavirus may delay the procedure for the time being.
UBS has undertaken to examine the investment interest and consider the alternative models this process could have, and the messages it has passed on to Piraeus Bank are very encouraging. It has contacted several investment funds, including Oak Hill, Farallon and Fortress.
It remains to be seen which funds will be invited to participate in the loan sale process and which will submit binding offers, but it is estimated there will be at least four.
Original Story: Ekathimerini |Ilias Bellos
Photo: Piraeus Bank site
Edition: Prime Yield
Spanish banks could face billions of euros in compensation claims if the European Union’s highest court delivers an unfavourable verdict on how they’ve been setting mortgage rates.
The EU’s Court of Justice is examining whether banks are sufficiently transparent with customers about why they were sold mortgages with interest rates based on a Spanish central bank index rather than the more widely used Euribor, which often resulted in thousands of euros in extra costs.
CaixaBank SA is the most exposed lender, with €6.1bn of outstanding mortgages linked to the Spanish central bank’s Loan Reference Index, or IRPH, followed by Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA. In an extreme scenario, banks could be forced to repay clients as much as €44bn, according to Goldman Sachs Group Inc.
While the case was brought by a Bankia customer, the decision will influence how such claims will be judged across Spain in the future. Some one million customers in the country bought IRPH-linked mortgages, paying an average of €25,000 more than those who got loans based on Euribor, according to an estimate by the Association of Financial Users, or Asufin.
A negative ruling for the banks would go against a 2017 verdict by Spain’s Supreme Court, which found that selling the IRPH mortgages couldn’t be abusive because they were tied to an official index.
IRPH is more difficult to calculate than Euribor because it also includes fees and credit risk. Marketed as a more stable option, the Spanish index has consistently produced higher rates for customers since it was created in the early 1990s. But the gap between the two indexes widened after 2008, when the European Central Bank began to drive down its benchmark rate.
A worst-case scenario for the banks would be a verdict that is retroactive, meaning it would include already-matured mortgages and past interest payments on existing contracts. About €108bn of home loans linked to IRPH have been sold since 1999, according to credit rating company DBRS. In September, Advocate General Maciej Szpunar of the EU court delivered mixed messages on the IPRH case in a non-binding opinion. He found that Bankia had been sufficiently transparent with the client, but also concluded that the use of the IRPH falls within the remit of the EU’s rules on unfair terms and therefore Spanish courts can consider it abusive on a case-by-case basis. “The opinion increases the likelihood that the ECJ will rule against the use of the IRPH, which would raise the number of consumer claims against banks for a lack of transparency on the sale of IRPH-linked residential mortgages, exposing Spain’s lenders to heightened litigation risks,” Moodys Investor Services senior analyst Alberto Postigo wrote in September.
Although the EU court follows the findings of its advocates general in most cases, there are notable exceptions. In 2016, it said banks must give back billions of euros to customers who paid too much interest on home loans pre-dating a May 2013 Spanish ruling on so-called mortgage floors. The decision was at odds with the non-binding opinion five months earlier, which had favoured the banks.
Original Story: The Gulf Times | Bloomberg
Photo: Photo by Pablo Rodríguez from FreeImages
Edition:Prime Yield
Cerberus is understood to have paid just below €125 million for a portfolio of five properties in Lisbon and Porto, including the current head of office of local insurer Fidelidade, which was the seller.
The portfolio consists of Fidelidade’s headquarters at Calhariz, with a total area of almost 20.000 sqm, Terminal K, at Santa Apolónia, with 6.600 sqm, the Marechal Saldanha building, with 2.300 sqm, the Malhoa 13 building, at Praça de Espanha, with 5.900 sqm, all in Lisbon and the Galeria de Paris, in Porto, with 12.800 sqm.
Fidelidade also has various central and subsidiary services installed in these buildings and it will remain its tenant until the construction works on its new headquarters at Entrecampos, in Lisbon are finished. This is where the company will concentrate all the services it has spread across Lisbon, «allowing it to consolidate the brand’s position through a new headquarters open to the community, designed with innovation in terms of environment, architecture, functionality and working conditions», explained the insurance company in a release.
Original Story: Property EU | Virna Asara
Photo: Property EU
Edition: Prime Yield
By end-September Greece’s four systemic banks had reduced their bad loans by more than €15 Bn compared to the same time last year, trimming their nonperforming (NPL) credit to €74 Bn on a group level from €89.6 Bn at end-September 2018.
This has paved the way for a dynamic fourth quarter, by the end of which some significant sale and securitization transactions will have been agreed.
These include the securitization of Eurobank’s Cairo portfolio worth €7.5Bn and the sale of its FPS loan management offshoot expected by year-end, and the securitization of Alpha’s Galaxy portfolio of €12Bn along with the sale of Cepal in the first half of 2020. In 2020 Piraeus will carry out two transactions totalling €3Bn while the National will securitize loans equal to €3.5Bn.
Original Story: Tornos News | News
Photo: Photo by JonteRemos/FreeImages.com
Edition: Prime Yield
Haya Real Estate, one of Spain’s market leader in nonperforming loans (NPL) and real estate asset management, has been selected by the Spanish band bank Sareb for the management of its rental portfolio, comprising more than 3,000 residential and tertiary rented assets.
The portfolio is made up of 80% residential assets and 20% of tertiary properties distributed throughout the Spanish geography. 40% of the assets are located in the Valencian Community, followed by Madrid Community, Castilla-León and Castilla-La Mancha, with 24% of the total portfolio, also, the South of Spain specially Andalusia and the Canary Islands, with 16%.
This new contract provides continuity to the rental management services that Haya has been delivering during the last years for Sareb. Efective from January 1st 2020, this asset management agreement is a strategic business line for Sareb, specially focused in adding value to the rental assets in the mid-term. The contract will last for two years.
This rental management contract is additional to the mandate granted in October 2019 by Sareb to manage the assets of the Esparta project, a €8.4 Bn (net book value NBV) portfolio of loans and REO (Real Estate Owned) up to June 2022.
Original Story: Eje Prime | News
Photo: Haya Real Estate
Edition: Prime Yield
US based investor Cerberus has reinforced its presence within the Portuguese market, by taking the real estate portfolio «Sertorius» from Novo Banco for €450 million, 10% less than the amount initially demanded by the seller.
This portfolio includes more than 200 buildings located mainly in Lisbon and Setubal and also empty terrains and logistic, housing and commercial assets, most of them were inherited by the bank through distressed contracts.
Completed during the second semester of 2019, the deal was now announced by JLL, that acted as the seller’s advisor in a released recently issued, where the consultants pointed out «the growing dynamics in terms of trading large portfolios of real estate owned asset – REOs and non-performing loans- NPLs» over last year.
The investment in this segment grew in line with the «strong» activity registered in 2018, and it should have amounted a total €6 Bn over in 2019, JLL says. The sale of Projecto Nata II, an NPL portfolio, to Davidson Kempner by Novo Banco for €3.3 Bn was a large contributor for this activity.
Original Story: Iberian Property | Vanessa Sousa
Photo: Novo Banco
Edition: Prime Yield
Greece’s Eurobank has completed its second public NPL (Nonperforming Loans) securitization, Project Cairo. This is the largest Greek NPL securitisation to-date, with a total GBV of €7.5bn is comprised of non-performing multi-asset loans at varying stages of restructuring and enforcement processes. Alantra Credit Portfolio advised the operation, acting as co-arranger and financial lead advisor to the deal.
This is expected to be also the first securitisation that will opt-in for Hellenic Asset Protection Scheme (“Hercules”), the Greek government recently approved HAPS guarantee scheme.
Cairo SPV will issue 3 classes of Notes’ notional amounts as per following: Senior Note €2.4 billion, Mezzanine Note €1.5 billion and Junior Note €3.6 billion. The Cairo transaction’s parameters have accounted for the estimated cost of Hercules and are subject to the targeted rating confirmation.
Eurobank will retain 100% of Senior Notes and will opt-in for the Hercules. Furthermore, it will retain 5% of Mezzanine and Junior Notes to comply with risk retention requirements.
20% of the Mezzanine Securitisation Notes and the minimum required percentage of the Junior Securitisation Notes will be sold to doValue S.p.A., the leading NPL servicer in Italy. The implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes corresponds to 33.3% of the total gross book value of the securitized portfolio.
75% of the Mezzanine Notes and 44.9% of the Junior Notes to be potentially distributed as dividend in kind to shareholders, subject, inter alia, to corporate and regulatory approvals.
The transaction took place in parallel with the disposal of part of FPS to doValue, which – adding FPS to its existing business in Italy and Spain – is set to establish itself as the top loan servicer and REO manager in South Europe. The Bank has recently sold portfolio Pillar to PIMCO, which will be also serviced by FPS along with the remaining €11.3bn performing and non-performing exposures that are still retained by Eurobank.
With this milestone agreement, Eurobank enters the final stages towards completion of its accelerated plan for the clean-up of its balance sheet and becomes the first Greek bank to turn the corner on the major legacy issue of the NPE stock. Together with Pillar, they are the first NPE securitizations in Greece and key components of Eurobank’s frontloaded NPE reduction strategy, which aims to achieve the targeted NPE ratio of below 15%.
«This transaction represents a landmark deal for the Greek Market, the inaugural NPL securitization to opt-in for the new Hercules asset protection scheme. We are proud to have played an instrumental part in it», Vasilis Kosmas, Partner of Alantra, commented.With an NPE pipeline currently sat at over €20bn across the Greek banking sector, Greek HAPS guarantee scheme approved, rising real-estate values, and re-worked borrower protection laws, the market is primed for another active year ahead.
Original Story: Webwire
Photo: Eurobank Site
Edition: Prime Yield
Alpha Bank’s management has designed a strategy to reduce its NPL (Nonperforming Loans) problematic stockpile and transform the group so that it can «turn the page,» the lender’s CEO Vassilis Psaltis told Kathimerini, stressing that the Greek economy is on a steady growth path and that the international investment community is regaining faith in the country’s prospects.
In the same interview, Psaltis notes that the time has come to make up for the ground lost during the crisis, explaining that Alpha Bank will be at «forefront of this national effort, securing credit to households and businesses of €14 bn by 2022.»
A few weeks ago, the bank introduced Galaxy, the largest portfolio of NPLs in Greece to date which is set for securitization in 2020. And, according to the CEO, this plan «reflects Alpha Bank’s commitment to leave the problems of the crisis behind and “become a bank once again,” reasserting its leading role as a financier of households, businesses and the Greek economy».
«This is not just the most significant securitization of nonperforming exposures in Greece, but the third largest in Europe», Psaltis stressed, adding that this transaction will allow Alpha to reduce its NPE rate from 44% in 2019 « to below 20% in 2020 and eventually to a single-digit rate in 2022. The percentage of NPLs in default for more than 90 days will fall below 5% in 2022».
«We are decisively proceeding to a cleanup of our balance sheet in order to devote all our energy to what we are doing really well, which is banking and financing the economy», Alpha’s CEO asserted. However, he reckons that the «we are doing it now, not only because we have the experience and capital strength to aim high, but also because three crucial conditions are now being met: Supervisory authorities are urging similar initiatives, a dramatic improvement in macroeconomic figures has been recorded, one that brings our country to the very center of investment interest, and thirdly, Hercules, the Greek asset protection scheme, has been activated».
Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Alpha Bank site
Edition: Prime Yield
Portuguese banks will keep reducing their large stock of bad loans in 2020, as nonperforming loan (NPL) portfolios continue to interest investors seeking yield in a low interest rate environment, lenders write off loans and Portugal’s economic growth continues to outpace that of many of its European neighbors, S&P Global Market Intelligence analyists say.
However, the pace of decline will slow over the coming years as the size of the Portuguese market makes large ticket deals more complicated going forward, analysts said.
Portugal was bailed out to the tune of €78 Bn during the financial crisis, and while the banking sector was rescued through state intervention, it was burdened with one of the biggest bad debt piles in Europe. Despite banks’ combined gross NPL stock declining by about €9 Bn, or 32%, to €19 Bn in the first nine months of the year, according to DBRS Morningstar, Portugal still had one of the highest NPL ratios among European banks in the European Banking Authority’s latest transparency exercise.
S&P Global Market Intelligence data shows that NPL ratios at individual banks have been trending down over the past two years. Between the first half of 2017 and the first half of 2019, Millennium BCP’s almost halved to 5.74% from 11.02%, while that of Novo Banco, created from the “good bank” of the troubled Banco Espírito Santo group, fell to 24.96% from 39.86%. Caixa Geral de Depósitos, for which data was spottier, saw its ratio fall to 8.76% in the first half of 2019 from 13.19% in the second half of 2017. And Santander Totta was 5.60% in the second half of 2018, down from 8.18% in the same period of 2017. Banco BPI end-June 2019 ratio fell year over year to 4.52%, although it is up from the first half of 2017.
«In our view, NPLs will continue to fall in 2020,» DBRS Morningstar analyst Nicola de Caro said in an email. «Reducing NPLs and non-core assets remains a key priority for Portuguese banks, as the sector’s asset quality is still weaker compared to the European average.»
Banks such as Novo Banco have been selling off bad loan portfolios to foreign funds, who are seeking returns in the low interest rate environment.
«It is one of the positive impacts of the negative rate scenario that everyone is hunting for yield,» Tom Kinmonth, fixed-income strategist at ABN AMRO, said in an interview. «It is one of the few areas where we are seeing good returns,»he said.
One Portuguese analyst who declined to be named for compliance reasons said NPL deals had picked up «significantly» in 2018 and that demand was continuing in 2019 amid «growing appetite for these kind of assets.»
Rafael Quina, analyst at Fitch Ratings, said he expected the NPL ratio for the Portuguese banking sector to fall to about 7% by end-2020 from about 9% at the end of June, helped by NPL sales, recoveries and write-offs. In the next two to three years, the ratio will decline further to 5% to 6%, he said.
According to this specialist, Fitch is expecting some improvement in terms of asset quality, but a gradual slowdown in the pace of improvement compared to 2018 and 2019, which were years of «quite significant» progress, he said. The potential for large deals on the Portuguese market is limited, with most lenders selling off small to medium sized portfolios to foreign funds, he said.
In addition, banks are not keen on selling their bad residential mortgages to distressed debt investors because of reputational or litigation risk, limiting the amount of loans they can sell, he said.
Economic growth remains strong in Portugal, despite concerns of a slowdown in eurozone economies, and that should help support NPL sales going forward, analysts said. The Portuguese central bank expects the economy to grow by 1.7% in 2020, down from a projected 2% in 2019 and 2.4% in 2018.
«That is still pretty good on a European basis,» ABN AMRO’s Kinmonth said. «The banks have been restructured very well, lending is still deleveraging … and even just a benign year would be pretty positive for NPL development,» he said.
Portuguese companies are managing their debt positions in a more conservative way than in the past, the legal process for recovering loans has improved, and regulators are pushing for NPL declines, factors which should support Portuguese banks in reducing NPLs, Quina said.
Original Story: S&P Global Market Intelligence | Jennifer Laidlaw and Mohammad Taqui
Photo: Photo by Alfonso Romero for FreeImages.com
Edition: Prime Yield
Spain’s Banks have speed up the sales process of their nonperforming loans (NPL) portfolios in the end of the year. The regulatory watchdogs are increasing the pressure towards an NPL ratio reduction among the country’s banking system.
Since the end of 2019 and up to the beginning of the new year, Spanish banks have sold – or are about to sell – more than €8 billion in NPL. The big news in relation to the last few years is that now these big portfolios aren’t just comprising mortgages only, but also consumer loans without collateral (unsecured) granted to companies and households.
In fact, these days there is more value “unsecured” than “secured” among the latest portfolios sold. Its presence is increasingly bigger in the portfolios, and is no coincidence that the nonperforming rate in the consumer credit is already surpassing the 5% of the general ratio, and in volume, has already reached €5 billion in overdue loans with a double digit annual growth.
The largest porftolios recently sold are those from BBVA, totalling €5 billion in toxic debt of which half correspond to unsecured loans – the largest portfolio with these features to be ever sold in the Spanish market. In specific, the bank sold its Project June, woth more than 300,000 upaid loan contracts, to opportunistic Swedish fund Intrum. On the other hand, in the end of 2019 the bank also sold its €2.5 billion Project Hera, made up largely of loans to SMEs, to Cabot and Carval.
Caixa Bank, for its hand, completed the sale of the €865 million Astún portfolio, comprising unpaid credits to households and corporates. Intrum was the buyer, along with 50% of the Vento portfolio, sold by Banco Sabadell.
Original Story: El Confidencial | Óscar Jimenez
Photo: Photo by Victor Iglesias from FreeImages
Edition: Prime Yield
PQH, the liquidator for bad banks in Greece, has signed a deal to sell a €1 Bn portfolio of unsecured impaired loans to loan servicer Intrum Hellas. The deal was agreed at a price of €71.1 Mn, meaning PQH will receive 7% of the outstanding principal.
The portfolio comprises unsecured retail and small business soured loans. Morgan Stanley advised PQH on the deal.
Intrum Hellas was created last month as a joint venture of Greek lender Piraeus Bank and Swedish loan servicer Intrum. It is the biggest independent servicer of non-performing loans and real estate assets in the Greek market, managing Piraeus Bank’s €26 Bn of non-performing exposures (NPEs), while Greece’s other 18 licensed credit servicers were handling a total of €17.5 Bn of non-performing loans as of June 2019.
Original Story: Ekathimerini | Author: News
Photo: Intrum site
Edition: Prime Yield
Following the sale of “Project Juno”, BBVA signed the transfer of a portfolio comprised of written-off loans to small and medium sized enterprises (SMEs) to Cabot and funds managed by CarVal Investors. Named “Project Hera”, this was the banks second largest written-off loans portfolio, with an approximate gross value of €2.1 Bn.
Just a few days before announcing this deal, BBVA had announced another sale of a portfolio of written-off loans (known as “Project Juno”). In this case, the portfolio consisted of loans to consumers with a gross value of €2.5 Bn. The operation was BBVA’s largest sale of a portfolio of written-off loans so far.
Over the past two years, BBVA has carried out several operations involving the sale of loan portfolios – mostly loans to developers and mortgages. Among them, the sale announced in December 2018 stands out. It was a portfolio of loans (known as (“Ánfora”) with an approximate gross value of €1.2 billion, primarily consisting of mortgages (both doubtful and bad loans). In addition, in June 2018, the bank sold a portfolio of loans to developers with a gross value of €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 “Jaipur”.
In November 2017, BBVA announced the transfer of its real estate business in Spain to Cerberus Capital Management, L.P., an operation that was completed in October 2018.
Original Story: El Confidencial | J. Zuloaga
Photo: BBVA
Edition: Prime Yield
Spanish bad bank Sareb’s – whose €34 Bn portfolio of non-performing real estate assets is Europe’s largest, according to investment banking consultancy Evercore -, record of selling assets has been far from stellar.
According to Bloomberg, investors are finding out that a complicated operational structure and conflicting shareholder interests make buying assets from Sareb difficult. Its chief, Jaime Echegoyen, concedes Sareb’s record isn’t exemplary.
«We try to guarantee that the investor clients receive the service they deserve in each one but it’s possible it’s not always like that,» he said in an interview in Madrid.
With Spain’s real estate market losing some steam after half a decade of growth, doubts are mounting about Sareb’s ability to meet its original mission — to pay back by 2027 the more than €50 Bn in capital and debt injected into it by the state and banks.
The bad bank said this week that it’s shaking up its management structure. It plans to appoint a chief executive officer to take over business responsibilities so Echegoyen can focus on corporate issues.
Sareb was created in 2012 when Spain was in the throes of a financial crisis after its real estate market bubble burst. About half way through its 15-year lifespan, it has sold only about a third of the net €51 Bn of defaulted loans and real estate assets it bought at a discount from troubled banks. With the reduction of bad loans tailing off since 2017 and with investors picking off the jewels, Sareb is sitting on more and more unattractive assets.
The entity may have to accept lower returns if it wants to wind-up the operation as planned by 2027, said Elena Iparraguirre, director of financial services ratings at S&P Global Ratings.
Creating Sareb was a condition of Europe’s bailout of Spain’s banks. It allowed lenders that took state aid, such as Bankia SA, to jettison soured assets. With mounting public anger about the bailout, the government persuaded banks such as Santander and CaixaBank SA to buy a 55% stake in Sareb. The government controls the rest.
But Sareb was dealt a difficult hand. It was given no time to build a team, so it relied on structures banks already had in place. Four bank-owned servicer companies divided up and marketed portfolios assigned to them, with commissions depending on the prices they secured.
The servicers were later sold to global investment funds.
Sareb’s objectives often diverge from those of the servicers. Both need to sell but Sareb can accept losses while the servicers driven by commissions are often unwilling to settle for lower prices.
Many of the assets Sareb took over from banks were grossly overvalued, according to a person with knowledge of the process. In some cases, holes were dug and foundations laid on properties to bump up their categorization and reduce the discount banks had to give Sareb, the person said. Sareb’s team of about 60 people had just a few months to put a price on more than 200,000 assets, with little time for on-site visits.
Sareb also has a conflicting relationship with its shareholding banks. While Sareb mainly reduces its stock one asset at a time, Spain’s banks, buoyed by the country’s economic recovery, sold their portfolios in huge packets at large discounts to funds. In the first half of this year, Spanish banks and funds sold €4.5 Bn of bad loans compared with €388 Mn in process for Sareb, according to data compiled by Evercore.
Yet when Goldman Sachs proposed to Sareb selling off a large portfolio, the idea was voted down by the board, comprised largely of bank representatives worried about flooding the market, people familiar with the operation said. Echegoyen says the deal failed because Sareb couldn’t offer the kind of discount such a large package would demand.
Sareb is trying to address some of its structural issues. It wants to renegotiate its relationship with the servicers to lower fees and take back control of some of the maintenance and legal activities. The bank has opened up the bidding process to other companies to drive competition.
Whatever Sareb’s record, one thing is incontrovertible, said Echegoyen. «We have saved the Spanish financial system,» he said. «It doesn’t mean Sareb was the white knight but we were part of a white knight – perhaps the shield or the lance or the horse.»
Original Story: Bloomberg | News
Photo: Sareb (Linked IN)
Edition: Prime Yield
The nominal value of loans serviced by domestic Credit Servicing Funds (CSF) increased in the third quarter of 2019, according to Bank of Greece’s official data.
In particular, the total value of loans serviced by CSFs increased by €1,967 Mn euros in the third quarter of 2019 and stood at €20,105 Mn, from €18,138 Mn in the second quarter of 2019.
The nominal value of serviced corporate loans increased to €5,408 Mn in the third quarter of 2019, from €5,367 Mn in the previous quarter. In further detail, the nominal value of loans to non-financial corporations (NFCs) increased by €41 Mn to €5,361 Mn at the end of the third quarter of 2019. Out of the total loans to NFCs, an amount of €3,719 Mn corresponds to loans to small and medium-sized enterprises (SMEs).
The nominal value of loans to insurance corporations and other financial intermediaries, serviced by CSFs, remained unchanged from the previous quarter, at €47 Mn.
The nominal value of loans to sole proprietors and unincorporated partnerships, serviced by the CSFs, decreased by €9 Mn from the previous quarter and stood at €2,256 Mn at the end of the third quarter of 2019.
The nominal value of loans to individuals and private non-profit institutions, serviced by the CSFs, increased by €1,936 Mn to €12,441 Mn at the end of the third quarter of 2019. In further detail, the serviced consumer loans decreased by €9 Mn to €10,105 Mn at the end of the third quarter of 2019, while the corresponding housing loans increased by €1,956 Mn to €2,329 Mn.
Original Story: The National Herald | Ana
Photo: Bank of Greece
Edition: Prime Yield
The Canadian rating agency DBRS said in a note that the reduction of nonperforming loans (NPL) and non-essential assets will continue to be a key priority for Portuguese banks, also warning about the quality of assets.
The Canadian rating agency attributes its position to asset quality ratios of the sector, which remain weaker compared to the European average.
Still, DBRS points to greater progress in asset quality in the first nine months of 2019 in Portuguese banking, with all banks reporting lower NPL ratios.
«Supported by a combination of sales, write-offs and recoveries, the combined stock of gross NPL, excluding off-balance sheet exposures, fell by around €9 Bn to €19 Bn in the first nine months of 2019, corresponding to a 32% year-on-year reduction,» the agency said.
DBRS also noted that the gross ratio of non-performing loans fell to around 8% in the first nine months of 2019, which compares with 12% in the same period of 2018.
Original Story: The Portugal News | News
Photo: Photo by Pierre Amerlynck on FreeImages.com
Edition: Prime Yield