NPL&REO News

New housing loans decline

1 December, 2023

Rising interest rates seriously hurt mortgage credit, affecting both the demand and supply for mortgages. This stems from the figures of the Bank of Greece, based on which mortgage disbursements fell in the second quarter of 2023 by 10.7%, while in the same period the number of loans granted showed a greater decline of 12.4%.

Loan disbursements fell from €270.3 million to €241.5 million, while the number of loan contracts signed was reduced from 3,535 to 3,097.

The picture at the six-month level is not particularly differentiated, as despite the marginal increase of 1.8% in disbursements to €507.8 million from €498.7 million in the first half of 2022, the number of housing contracts signed decreased marginally to 6,578 in the first half of 2023 from 6,596 in the corresponding period last year.

As BoG notes in its recent financial stability report, disbursements remain low both in absolute terms and in comparison to the pre-global financial crisis level.

The decline in demand is a result of household anxiety over rising interest rates, which increase the cost of servicing their debt obligations, and rising house prices, which make it almost prohibitive to attract middle-income buyers.

The banks’ policy was not accompanied by a relaxation of credit criteria, which is confirmed by the fact that the weighted average loan-to-property ratio fell in the second quarter of the year to 61.4% from 63.1% in the corresponding period last year.

This means that those who resorted to borrowing to buy a home had available equity of 39.6% of the value of the property they purchased. Accordingly, the weighted average loan-to-income ratio stood at 3.5, indicating that the total amount of loans secured by residential real estate is almost 3.5 times higher than the annual disposable income of borrowers.

From the third quarter of the year, it is expected that the My Home program will have benefited the housing loan market, having gathered strong interest with the submission of approximately 40,000 applications since its introduction in April.

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Photo by Svilen Milev in FreeImages
Edition: Prime Yield

Eurobank posts lower profit up to September on higher provisions

30 November, 2023

Eurobank, Greece’s largest lender by market value, reported lower profit for the first nine months of the year, on higher bad loan provisions and operating expenses.

Net earnings came in at 980 million euros in the January-to-September period, an annual drop of 11.4%.

Provisions for non-performing loans (NPL) stood at 90 million euros in the third quarter, up from 73 million euros in the same quarter last year.

Greek banks cut their bad loan ratios to below 8% in the first half of 2023 from 45% in 2016, but the ratio is still higher than their peers in the euro zone, the legacy of a decade-long financial crisis.

Eurobank’s NPL exposure ratio (NPE) fell to 4.9% of its total loan portfolio from 5.6% at the end of September last year.

The bank last month was the first from Greek lenders to end state participation in its share capital by repurchasing a 1.4% stake from state-controlled bank bailout fund HFSF.

The completion of the 1.4% share buy-back this year will be followed by a cash dividend payment out of 2023 financial results next year,” Chief Executive Officer Fokion Karavias said in a statement.

Greek lenders have returned to profit in the last few years and hope to resume paying dividends in 2024, for the first time since the Greek debt crisis erupted in 2010.

Original Story: Reuters | Staff
Photo: Eurobank website
Edition: Prime Yield

Spanish banks increase problematic loans by €4.7 billion in Q3

30 November, 2023

The main Spanish banks increased the volume of non-performing loans (NPLs) and loans under special supervision by €4,772 million in the third quarter compared with the second, concentrated mainly in Santander and BBVA, according to the latest quarterly report by Accuracy on Spanish banks about the Spanish banking sector.

The company points out that the positive trend in NPLs in recent quarters “seems to have reversed” and began to deteriorate between July and September, leading banks to increase their provisions.

Santander has increased its special monitoring loans by 3.3% and its doubtful loans by 1.74%, due to the growing instability outside Europe. Provisions increased by 22.5% year-on-year, driven by the Americas, although the NPL ratio remained almost unchanged. The cost of risk increased by 27 bp, combined with higher provisions on a loan portfolio that was 2.3% lower year-on-year.

BBVA recorded an increase of 2.93% in the balance of loans under special surveillance due to a 2% increase in credit risk across all geographies. However, the increase in NPLS was mainly due to the worsening of retail loans in South America and Mexico. Provisions increased 30.6%, reflected in a higher cost of risk of 111.2 b.p. in the third quarter. quarter. Even so, BBVA’s NPL ratio remained below the 2022 level, falling from 3.5% to 3.3%.

At CaixaBank, according to Accuracy, the balance of NPLS declined 0.9% quarter-on-quarter thanks to the significant drop in consumer loans, but special surveillance loans increased by 4.4% due to the uncertainties in the housing market, forcing the reclassification of certain mortgages. reclassification of certain mortgages.

Provisions reported by this bank in the third quarter increased 39.0% year-on-year and 36.7% in the quarter to €933 million. Even so, Accuracy does not see a deterioration in asset quality, with an NPL ratio that remained stable at 2.7% in September compared to June.

Bankinter’s NPL ratio increased slightly by 9 b.p., although NPLS declined by €20 million. The bank reported the largest percentage increase (191.9%) in loan-loss provisions among the main Spanish banks, in a context in which the NPL ratio remained stable: in 2022 it stood at 2.1% and at the end of September at 2.2%.

Sabadell’s NPL ratios remained stable, with loan-loss provisions down 3.7% compared to 2022 due to to lower provisions for financial assets and real estate investments.

Unicaja reduced its NPL balance by 9.6% thanks to the sale of an NPL portfolio. Thus, the bank reported a 5.6% drop in provisions in line with the 8.6% decline in loans and advances to customers and a 23% lower volume of inflows to NPLs. The NPL ratio declined to 3.4%.

Although there are also slight upturns in the cost of risk, Accuracy rules out the possibility of a banking crisis.

Analysing the data by geographies, the provisions of Spanish institutions in Europe increased across the board, with Poland being the country where they rose the most (11%).

On the other hand, Acuraccy points out that the profitability of Spanish banks has also improved across the board, and with the exception of Sabadell and Unicaja, they have started to cover their cost of capital, while the stock market value in recent months of BBVA (+64.7%), Santander (+46.8%) and Sabadell (+56.7%) have outperformed the Ibex 35 (+26.4%) and the S&P 500 (16.6%). The worst performers were Bankinter (+3.7%) and Unicaja (+9.2%).

“After the stock market volatility suffered by banks during the US regional bank crisis, European banks, and Spanish banks in particular, are still on an upward trend. In the short term bullish trend with results that continue to improve across the board in line with the rising markets, thanks to a significant increase in revenues due to the rise in interest rates and efficiency ratios higher than their European and American peers”, says the report.

Original Story: Europa Press | Author
Photo: Photo by Victor Iglesias from FreeImages
Edition and translation: Prime Yield

€4.6 billion in NPL for sale on the market

30 November, 2023

Caixa Geral de Depósitos (CGD), Montepio and Lx Partners are trying to clear problem assets from their balance sheets.

Anticipating an increase in the NPL ratios among their portfolios, at a time when the risk of default among families has also risen, fuelled by rising interest rates, banks and management companies are looking to clear bad loans from their balance sheets. Caixa Geral de Depósitos (CGD), Montepio and Lx Partners have €4.6 billion up for sale.

CGD has the Pluto portfolio worth €150 million, Banco Montepio has the Côa portfolio worth €233 million and LX Partners has the Cascais portfolio worth €4.2 billion, according to a report in Jornal Económico.

According to the Bank of Portugal (BdP), although the gross NPL ratio remained unchanged at 3.1% in the second quarter (the NPL ratio for individuals also remained at 2.4%), banks increased the ratio of loans in ‘stage 2’ for individuals to 9.5% (compared to 9% in the first quarter).

The increase is most significant for housing loans, where the ratio rose to 9.1%, compared to 8.4% in the first quarter.

The ‘stage 2’ loan ratio refers to loans where banks believe there is a higher risk of losses due to customer default. The stage 2 ratio for consumer and other loans fell to 10.7% in the second quarter from 11.1% in the first quarter.

Original Story: Jornal Económico | Maria Teixeira Alves
Photo: Photo by Svilen Milev on FreeImages
Edition and translation: Prime Yield

Unprecedent biddings for NBG

29 November, 2023

Bank bailout fund HFSF confirmed the sale of 22% of the share capital of National Bank, out of the total 40.39% currently held by the state, after the unprecedented sum of offers observed in the private placement, with the sale oversubscribed by more than eight times.

The offers collected amounted to €8.5 billion, as a result of which the fund increased the number of shares it made available from 182,943,031 to 201,237,334 in total.

Investors in the Greek public offering must subscribe at the maximum price. It should be noted that high participation was already recorded on the first day the bid book opened (November 14), with bids exceeding €6 billion, pushing the price for subscriptions to the private placement close to the upper price range.

That way, the discount was limited in relation to the current price of National Bank, on the basis of which the shares were made available through the bookbuilding process, which also discounts a lower price compared to that of the dashboard.

The participation in the private placement of large institutional investors abroad was overwhelmingly high, as well as the participation of private and special investors (institutionals) in Greece.

The fact that hedge funds received only 4% of the amount they requested is revealing of the high quality of investors, while the fact that the public proposal in Greece from private investors raised €450 million is indicative of the high demand, not including the participation of special investors who also participated in the public offering domestically.

The participation of long-term investors covered more than half of the demand and, according to the first data from the allocation of shares, among the big investment houses taking positions in National are Fidelity, BlackRock, Capital, Allianz, Lazard and investment funds Norges (Norway), GIC (Singapore), Robeco (Netherlands), RWC (America) and Wellington (America).

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

Positive outlook for the Greek banking sector

28 November, 2023

ccording to the Bank of Greece, the liquidity and funding conditions of the Greek banking sector improved further.

The Greek banking sector has positive prospects, according to the Bank of Greece (BoG) latest Financial Stability Report.

More specifically, the Greek sovereign’s return to investment grade mitigates the risks to the financial system and the outlook of the Greek banking sector is positive, the central bank said in the report.

However, it noted that heightened geopolitical risks, persistent inflationary pressures, economic growth slowdown and the risk of a sharp repricing of assets in international money and capital markets keep the risks to financial stability high.

Despite the above, banks’ profitability is improving, while the implementation of their strategies for resolving the legacy stock of non‑performing loans (NPLs) continues, it added. The banking sector’s capital adequacy is satisfactory, but banks should further shore up their capital buffers.

According to the Bank of Greece, the liquidity and funding conditions of the Greek banking sector improved further as a result of increased customer deposits and despite partial repayment of European Central Bank (ECB) funding.

As for the ratio of NPL to total loans fell marginally to 8.6% in June 2023, from 8.7% in December 2022. It should be noted that all four significant banks have now reached their single-digit NPL targets, with one of them below 5%. However, actions aimed at resolving the legacy stock of NPLs and converging with the European average (June 2023: 1.8%) should be continued.

Original Story: Naftemporiki | Staff
Photo: Photo by Jonte Remos in FreeImages
Edition: Prime Yield

Santander sets the sale of a €5 billion NPL portfolio

28 November, 2023

The sales process of project Talos II is expected to start until the end of the year.

Santander is preparing to launch the sales process of a massive non-perming loans (NPL) portfolio until the end of the year. Valued up to €5 billion, the package was named Talos II, after its predecessor Talos I, a NPL portfolio of €600 million sold to Marathon in 2021 for €100 million.

The full value of the portfolio will only be known when it is presented to the market. To this portfolio of non-performing loans will be added another portfolio, called “Sir Barton”, made up of €530 million of overdue loans whose real guarantees are up for sale.

Original Story: Jornal de Negócios | Fábio Carvalho da Silva
Photo: Santander sede Ciudad Financiera – website Santander
Edition and translation: Prime Yield

Mortgage delinquencies record highest quarterly rise since March 2014

10 October, 2023

The brutal rise in the Euribor caused by the increase in official interest rates by the European Central Bank (ECB) is beginning to take its toll on families who got into debt to buy a house. The volume of mortgages that accumulated at least three months of non-payment rose by 3.9% between April and June, to €11,823 million euros, as reported by the Bank of Spain. What is most significant, however, is that the increase with respect to March was €443 million. This is the sharpest quarterly rise since the one that occurred between January and March 2014 (€1,619 million), the quarter in which the peak of mortgage delinquency was reached as a result of the bursting of the housing bubble.

The balance of doubtful mortgages has been falling more or less steadily since the first quarter of 2014. In all the years that have elapsed, there have only been occasional and anecdotal increases in five quarters, but in all these cases they were minor (between 55 and 213 million euros) and were followed by subsequent falls. This time, however, there are signs that this could be the beginning of a turnaround. ECB interest rates are at their highest levels since May 2001, the Euribor is at a 2008 high and high inflation is eating away at household income and ability to pay.

Non-performing mortgages, however, account for 2.44% of the total, higher than in March (2.33%), but contained in historical comparison. It is notably lower than the rate of 6.28% reached at the peak in March 2014. In any case, it is likely to increase in the coming quarters. On the one hand, because of the aforementioned increase in unpaid mortgages. And on the other, because the mortgage balance has been falling since June 2022 due to the drop in new operations and the increase in early repayments caused by the inflationary shock. The bank’s mortgage portfolio has fallen by €13,290 million and 2.7% since then, to €483,224 million euros.

Consumer and corporate

Household consumer loans are also registering an increase in non-performing loans. In the second quarter, the unpaid balance amounted to €4,148 million, an increase of €86 million and 2.11%, in line with the rise between January and March. The total consumer loan portfolio increased by 1.43% to €94,580 million, but as the increase in NPL was higher, the default rate rose to 4.38%. On the other hand, in loans to companies, both the non-performing balance (down by €522 million and 2.3% to €22,391 million) and the rate (from 4.13% to 4.09%) fell.

The data on NPLs by segment are published every three months and with a certain delay, but those on NPLs for total credit are more agile, which gives clues as to what is happening with defaults in the third quarter. In July, the total balance of doubtful bank loans fell by €399 million and 0.94%, to €41,774 million. The weight of defaults on total credit to the private sector, therefore, remained for the second month at 3.5%, the lowest level since December 2008. Bankers and supervisors, in any case, have been warning for some time that the sharp rise in interest rates will sooner or later lead to a rise in defaults, although they assure that it will be moderate and to manageable levels for the sector.

Original Story: El Periodico | Pablo Allendesalazar<
Photo: Photo by Jason Hochman from FreeImages
Edition and translation: Prime Yield

Non-financial sector debt falls to 806.6 billion euros in July

10 October, 2023

The indebtedness of the non-financial sector (NFC – public administrations, companies and private individuals) fell by €400 million in July compared to June this year, totalling €806.6 billion, the Bank of Portugal (BdP) said.

Of this total, €440.6 billion related to the private sector (private companies and individuals) and €365.9 billion to the public sector (public administrations and public companies).

In July, private sector indebtedness fell by €1.4 billion, with the indebtedness of private companies falling by €1.3 billion, essentially to foreign countries (€900 million) and to the financial sector (€400 million), in the form of short and long-term loans.

Household indebtedness fell by €100 million, mainly to the financial sector.

As for public sector debt, it increased by €1 billion.

According to the BdP, “this increase was mainly external (€900 million), essentially due to the issue of short-term debt securities.”

In year-on-year terms, compared to July 2022, the indebtedness of private companies and the indebtedness of individuals grew by 0.4% compared to the same month in 2022.

“However, this increase was lower in both sectors than in June 2023, by 0.3 and 0.5 percentage points respectively,” notes the central bank.

The BdP updates its statistics on financial sector indebtedness on 23 October.

Original story: CNN Portugal | Agência Lusa
Photo: Big Stock Photo
Edition and translation: Prime Yield

Fitch upgrades Greece’s four systemic banks ratings

4 October, 2023

Fitch Ratings has just upgraded Greece’s four systemic banks ratings, following a recent round of upgrades of Greece’s credit rating.

More specifically, Fitch Ratings upgraded Eurobank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘, and Viability Ratings (VRs) to ‘bb’ from ‘bb-‘. The outlooks on the Long-Term IDRs are Stable.

The upgrades reflect structural improvement to Eurobank’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce balance-sheet risk. This has allowed the bank to accumulate capital, strengthening buffers relative to regulatory requirements and provided greater flexibility to pursue investments and growth initiatives, which we expect to result in greater business-model sustainability.

Fitch Ratings also upgraded National Bank of Greece SA’s Long-Term Issuer Default Rating (IDR) to ‘BB’ from ‘BB-‘ and Viability Rating (VR) to ‘bb’ from ‘bb-‘. The outlook on the Long-Term IDR is Stable.

The upgrades reflect structural improvement to NBG’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce risk on its balance sheet. This has allowed NBG to accumulate capital well above regulatory requirements and provided strategic flexibility to pursue investments and growth initiatives, which we expect to result in greater business model sustainability.

Fitch Ratings upgraded Piraeus Bank SA’s Long-Term Issuer Default Rating (IDR) to ‘BB-‘ from ‘B’ and Viability Rating (VR) to ‘bb-‘ from ‘b’. The outlook on the Long-Term IDR is Stable.

The upgrade reflects the acceleration of Piraeus’s strategy to reduce risk on its balance sheet, which led to a marked reduction of its non-performing exposure (NPE) ratio to levels more closely in line with higher-rated peers. It also reflects the strengthening of its regulatory capital ratios and the resulting reduction in capital encumbrance by unreserved problem assets (which include NPEs and foreclosed assets). The upgrade further considers Piraeus’s structurally improved profitability, which will drive further capital accumulation; stable funding; and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Fitch Ratings has upgraded Alpha Bank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB-‘ from ‘B+’ and Viability Ratings (VRs) to ‘bb-‘ from ‘b+’. The outlooks on the Long-Term IDRs are Stable.

The upgrade reflects structural improvement in Alpha’s profitability, which will drive further organic capital generation and result in stronger capital ratios. The upgrade also reflects the continued downward trajectory in the bank’s non-performing exposure (NPE) ratio, stable funding and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Original Story: Greek City Times | Athens Bureau
Photo: Alpha Bank website
Edition: Prime Yield

Sabadell prepares first sale of ‘healthy’ mortgages to improve its accounts

4 October, 2023

Spanish banks are looking for new assets to dispose of in order to avoid an upturn in delinquency. This is the case of Banco Sabadell, which has just launched the first sale in its history of mortgages that are up to date with payments, but with poor prospects or which have been in arrears in some instalments, known in the jargon as reperforming loans (RPL).

The bank is working with Deloitte to value the sale through a securitisation of the Dara Project, a portfolio of €300 million in healthy mortgages, but with a probability of non-payment.

Original Story: El Confidencial | J. Zuloaga
Photo: Banco Sabadell website
Edition and translation: Prime Yield

BCP puts NPL for sale in the face of rising insolvency warnings

3 October, 2023

DBRS warns of the impact of the increase in insolvencies on Portuguese banks’ non-performing loans (NPL). BCP sells another portfolio after selling the Corporate Restructuring Fund.

BCP has put a portfolio of NPL worth €65 million on the market, according to information gathered by ECO from a market source. This is the “Light Project” that the bank led by Miguel Maya put up for sale last month and which includes loans in default and unsecured.

The year 2023 has been marked by a low volume of NPL transactions in the Portuguese market, after the national banks made a huge effort to clean up their balance sheets in recent years, which allowed them to reduce their NPL levels to 3%.

Even so, in the case of BCP, which declined to comment on the operation, the trend of reducing balance sheet risks continues. As has been the case with the rest of the banking sector.

Meanwhile, Novobanco revealed in its report and accounts for the first half of the year that it had also sold its position in the restructuring fund with a gain of €4.3 million. It seems that BCP and Novobanco sold their positions to Oxy Capital, the fund’s management company, while Caixa Geral de Depósitos and Banco Montepio will launch an organised sale process this month.

Other banks are also carrying out NPL operations. For example, Santander Totta sold three portfolios – Pool 58, 59 and 60 – with a total value of around €130 million. These portfolios include secured and unsecured mortgage loans.

At BPI, the “Citrus Project” involved the sale of a portfolio of problematic secured and unsecured loans also worth around €130 million.

Original Story: CNN Portugal | Alberto Teixeira
Photo: Millennium bcp website
Edition and translation: Prime Yield

New mortgage credit companies are coming

28 September, 2023

Part of the housing credit financing deficit, estimated at €6 bn per year, is to be claimed by mortgage credit companies, whose are now being licensed at the initiative of the Ministry of National Economy and Finance.

These are companies financed mainly by funds, but also by other entities, such as insurance companies, with the aim of lending to individuals for consumer and housing loans, but also to businesses – whether it is refinancing or new lending.

The key feature of credit companies is that since they do not rely on customer deposits, they have more flexibility in granting criteria and pricing capabilities depending on the customer’s risk.

That flexibility does not necessarily imply lower interest rates. This depends on the category in which a credit company operates and specializes, and, of course, on the customer’s profile and the credit risk involved lending them money. Borrowers who were burdened in the past or are still burdened with bad loans or who are considered high risk may be financed with a higher interest rate than the average lending rate of a bank, while other categories may pay the same or even a lower rate.

Original Story: Ekathimerini |Evgenia Tzortzi
Photo: Photo by Jonte Remos in FreeImages
Edition: Prime Yield

Spanish banks’ NPL ratio remains at 3.5% in July

27 September, 2023

The non-performing loans (NPL) ratio of Spanish banks remained unchanged at 3.50% in July, after falling by nine basis points in June, according to the latest provisional data published by the Bank of Spain.

The Bank of Spain’s provisional figures show that the NPL was unchanged at 3.50% in July, after falling by nine basis points in June.

Thus, the doubtful assets ratio fell by 35 basis points compared to July 2022 and remained at its lowest level since December 2008, when it stood at 3.37%.

The lack of change in the ratio can be explained, on the one hand, by the €399 million reduction in the volume of doubtful loans held by deposit institutions and financial credit institutions, to €41,774 million, the lowest volume since July 2008. Compared with the same month in 2022 compared with the same month in 2022, doubtful loans decreased by €5,661 million.

On the other hand, in the seventh month of the year, total credit granted contracted by €11,119 million, to €1.194 trillion. The slowdown is more pronounced in the annual comparison. Compared with July 2022, the decline is €38.08 billion.

The data broken down by type of institution show that the doubtful assets ratio of all deposit institutions (banks, savings banks and cooperatives) closed July at 3.39%, the same ratio as in July 2022. 3.39%, the same ratio as the previous month and down from 3.77% a year earlier.

The NPL ratio of financial credit institutions rose to 6.43% in the seventh month of the year, up from 6.33% in June and above the 6.28% a year earlier. 6.28% a year earlier.

According to data from the Banco de España, provisions for all credit institutions fell to €30,102 million in July, down 1.4% with respect to the previous month and 9.3% with respect to July 2022.

Original Story: Europa Press | Europa Press
Photo: Photo by Victor Iglesias from FreeImages
Translation and edition: Prime Yield

Eurobank to buy back its shares from HFSF

27 September, 2023

Eurobank Ergasias Services and Holdings SA submitted an official request to buy back the Greek state’s 1.4% stake in the lender for €1.80 euros a share.

The lender requested the buy back from the Hellenic Financial Stability Fund, a bank recapitalization tool that was established at the start of the Greece’s bailout programs, offering just over €93.7 million for the stake, according to Bloomberg calculations.

The fund has already started its plan to divest from the country’s lenders and Eurobank is the first bank in the process.

The bank entered into a conditional share purchase agreement with HFSF to acquire all of its issued shares held by HFSF, both parties said in statements.

According to the deal, the HFSF will launch a disposal process open to eligible investors and the sale and transfer of the shares to Eurobank is subject to “the non-selection by HFSF of a preferred bidder through the competitive process,” both sides said.

The HFSF currently also holds a 40% stake in National Bank of Greece SA, 27% of Piraeus Bank SA and 9% of Alpha Bank SA.

Original Story: BNN Bloomberg |Sotiris Nikas
Photo: Eurobank website
Edition: Prime Yield

Portugal approves 30% cut in mortgage rates for struggling borrowers

27 September, 2023

Portugal’s government said that banks must discount the benchmark six-month Euribor rate by 30% when calculating mortgage interest rates if asked to do so by borrowers struggling to deal with rising interest rates and avoid default.

Around 90% of Portugal’s stock of 1.4 million mortgages have variable rates indexed to euro interbank offered rates (Euribor), one of the highest levels in the euro zone. But interbank rates have soared as the European Central Bank hiked interest rates from record lows.

As a result of this measure, the implied interest rate on mortgages cannot exceed 70% of the six-month Euribor rate in the next two years,” Finance Minister Fernando Medina told a news briefing.

Those with mortgages indexed to three- and 12-month Euribor rates will also receive a discount equal to the nominal amount resulting from the cut in the six-month rate, he added.

Banks will be able to start recovering unpaid interest from those that requested the reduction after four years by redistributing the payments until the mortgages mature.

Medina said the new measure and the interest subsidy that the state already guarantees to the most indebted families should help around one million families.

“The abrupt rise in mortgage payments is undoubtedly the most serious problem that Portuguese families face today, in addition to the impact of inflation, and we want to give them stability for two years,” he said.

Bank of Portugal Governor Mario Centeno has recently estimated that at the end of 2023 the mortgage expenses of around 70,000 families could exceed 50% of their net income.

Medina said the new measure, which helps banks to avoid non-performing loans (NPL), was agreed with the Association of Portuguese Banks APB and the central bank.Portuguese banks suffered a spike in bad loans after the economic and debt crisis in 2010-13, but have since reduced the share of NPLs to 3.1% of total credit from a peak of 17.9% in mid-2016.

Original Story: Reuters | Sérgio Gonçalves
Photo:Photo by Svilen Milev on FreeImages
Edition: Prime Yield

Corporate debt reaches a new record high: demand now exceeds €50 billion

25 September, 2023

Corporate credit demand has broken the downward trend seen in the last two months and, in June -the latest data available-, the granting of commercial loans exceeded €50 billion, as detailed in the latest report on nonperforming loans (NPL) and credit from the Bank of Spain. The latest metrics published by the national supervisor show that companies continue to increase their indebtedness in order to obtain capital to be able to manoeuvre and undertake new operations.

Despite the fact that the Spanish economy, like the rest of the European economies, is in a period of monetary tightening, companies continue to demand loans to stay the course and meet operations. It is worth noting that so far this year, the European Central Bank has raised interest rates five times in a row.

Commercial loans granted exceed €51.7 billion

As detailed in the latest report on delinquency and credit published by the Bank of Spain, the demand for commercial loans grew by more than 4.5% in June compared to January. Thus, the volume of loans granted amounted to €51.746 b. Banks closed the first half of the year with a growing demand for credit from companies and for consumer loans.

In fact, the volume of consumer credit, in addition to breaking the downward trend seen in April and May, is the highest so far this year. Although banks have tightened lending conditions due to interest rate hikes, commercial credit continues to grow and, up to June, the capital loaned exceeded €51.7 billion.

While it is true that commercial loans have somewhat looser conditions than the rest of the assets, the interest rate hikes have been applied to all loans in the same way, which means that they have also become more expensive. Even so, the volume of capital lent grew by more than €4 billion month-on-month in June.

Original Story: Economia Digital |Alejandro Montoro
Photo: Photo by Jason Hochman from FreeImages
Edition and translation: Prime Yield

Fitch upgrades Greece’s four systemic banks ratings

25 September, 2023

Fitch Ratings has just upgraded Greece’s four systemic banks ratings, following a recent round of upgrades of Greece’s credit rating.

Original Story: Greek City Times | Athens
Photo: Photo by Toomas Järvet in FreeImages
Edition: Prime Yield

Banks sell another restructuring fund after millionaire ECS deal

25 September, 2023

BCP has already disposed of the Corporate Restructuring Fund, with banking exposures to Cabelte and the CCM group. Caixa and Montepio have hired PwC and Baker Tilly to sell their positions.

The banks are selling yet another restructuring fund, and this after the millionaire deal with ECS luxury hotels at the end of last year. In the last few days of June, BCP closed the sale of its position in the Corporate Restructuring Fund, valued at around €20 million. ECO knows that Caixa Geral de Depósitos (CGD) and Banco Montepio hired PwC and Baker Tilly to organise a process to sell their units in this fund, which manages the banks’ exposure to electrical cable manufacturer Cabelte and ceramics group CCM.

ECO contacted the banks, but only Caixa confirmed that “it is carrying out an organised process to sell the Corporate Restructuring Fund”. BCP, which announced the sale in its first half report and accounts, declined to comment on the operation, namely whether it had sold its units to Oxy Capital, which is the fund’s management company, as two market sources told ECO. Novobanco – which has also sold its position – and Banco Montepio declined to comment.

In recent years, Portuguese banks have made a dramatic effort to reduce non-performing loans, including recoveries, cures and the sale of large portfolios. But now, with NPL (non-performing loans) ratios at historic lows and below the “magic number” of 5%, banks are turning to restructuring funds to continue cleaning up their balance sheets.

At the end of last year, they sealed the sale of the ECS restructuring funds, a portfolio of luxury hotels and golf courses, in what became known as the property deal of 2022, made for around €800 million with the American fund Davidson Kempner. They also tried to sell Discovery, another fund with tourism assets, but the process didn’t have a positive outcome.

This time, they are selling the Corporate Restructuring Fund, which is valued at around €70 million on the balance sheets of the four banks. Novobanco has the largest exposure, valued at 30 million, followed by BCP. The positions of the public bank and Banco Montepio are valued at 14 million and 4 million, respectively, and the organised process to sell these two holdings should be launched on the market next month.

This fund is managed by Oxy Capital, led by Miguel Lucas, and manages the exposures of these four banks to just two companies: Cabelte, which made €190 million last year and has liabilities of 84 million, and the Carlos Cardoso Mota group – the holding company had liabilities of 77.3 million in 2021.

Contacted by ECO, Oxy Capital had not replied by the time this article was published.

Bank disposed of a billion last year

These restructuring funds were created with the aim of taking over the management of property assets and other corporate exposures that ended up in the hands of the banks over the past decade due to debtor difficulties.

By handing over the problem assets to a specialised fund in exchange for units, the banks shared the risk between themselves. However, these exposures weigh heavily on risk-weighted assets and consume the banks’ capital, which is why they have long wanted to sell. In fact, the European Central Bank (ECB) has been pressurising them to get rid of these assets.

That’s what they’ve been doing. In 2022, BCP, Novobanco and Caixa reduced their exposure to these restructuring funds by around €1 billion, a decrease that is mainly explained by the ECS deal.

Despite this, these three banks still had exposure valued at more than €750 million, namely to the Discovery Portugal Real Estate Fund (400 million) and the Aquarius Real Estate Fund (250 million).

Original Story: Eco |Alberto Teixeira
Photo: Banco Montepio website
Edition and translation: Prime Yield

Bain Capital secures €500 million nonperforming leasing portfolio

21 September, 2023

Bain Capital, throughout its Special Situations arm, secured a €500 million leasing portfolio from Greece’s Piraeus bank. The acquisition has made via shares of Piraeus Bank subsidiary.

Bain Capital has acquired 100% of Sunshine Leases, a Greek financial leasing subsidiary of Piraeus Bank, including a portfolio of non-performing exposures from Greek leasing company HCL.

Original Story: PropertyEU |Branisçav Pekik
Photo: Bain Capital
Edition: Prime Yield