Spanish institutions have removed bad loans from their balance sheets, and sales are expected to increase in the coming months.

Spanish banks have reduced their non-performing loan (NPL) ratio below 3% for the first time since October 2008. According to financial sources, the European Central Bank (ECB) is pressuring institutions to remain below this threshold, which has driven an increase in the sale of portfolios of doubtful or failed loans (non-performing loans, or NPLs). As of June, Spanish banks reported an NPL ratio of 2.89%, according to data from the Bank of Spain—the lowest level since October 2008. To achieve this, they made a final sprint during the quarter, selling off portfolios and reducing the total volume of doubtful loans to €33.703 billion—€788 million less than in May, and €1.849 billion less than in March.

Although delinquency has long ceased to be a major concern for analysts and investors, the regulator remains closely focused and wants banks to take advantage of the current economic boom to minimize the volume of doubtful loans on their balance sheets. The most direct approach is selling portfolios to opportunistic funds, typically at a discount to the gross value of the loans. In these cases, banks draw from existing provisions or allocate new ones, recognizing losses but improving their balance sheets.

“In the first half of 2025, Spain’s NPL buy/sell market maintained a similar level of activity compared to the same period last year, dominated by unsecured portfolios and growth in the REO (Real Estate Owned) and PL/RPL (performing and reperforming loans, especially secured) segments. The increase in PL/RPL transactions indicates a growing appetite for lower-risk assets with higher recovery potential, likely tied to economic improvement and falling delinquency rates. Based on information from leading financial advisors—who are aware of projects launching after September—we expect a similar level of market activity in the second half of 2025,” explains Augusto Piñel, partner at Gómez-Acebo & Pombo.

Among the banks making strong efforts to reduce NPLs is Banco Santander, which ended June with a ratio of 2.91%, down from 2.99% in March and 3.05% in December. Sabadell also improved, dropping from 3.21% a year ago to 2.47%. Excluding TSB—which it sold to Santander (with the deal expected to close in 2025)—the figure fell from 3.8% to 2.81%. Unicaja improved from 2.9% to 2.2% over the year, a level similar to Bankinter’s 2.14%. BBVA lags behind, with a 2.9% ratio compared to 3% in December.

The rate at which new non-performing loans are appearing is slower than in the past, allowing banks to focus on removing existing doubtful loans from their balance sheets. Moreover, they are increasingly selling newer loans, gradually phasing out older ones—thereby reducing the discounts at which portfolios are sold. Additionally, more portfolios are being sold that contain loans not in default but that have experienced some payment issues (so-called reperforming loans, or RPLs). In the coming months, banks expect to continue this portfolio-selling strategy. In fact, several specialist advisors believe the trend will accelerate.

José Antonio Olavarrieta, partner at Deloitte, notes there is increasing activity with more transactions: “We expect a certain continuity in the types of portfolios being sold compared to the first half of the year, though with a higher number of deals, especially in the RPL and NPL segments (mainly unsecured and mortgage-backed),” he adds.

Greater Transparency

Ángel Pérez López, partner at Uría, highlights that Spain is still pending approval of the Draft Law on Credit Purchasers and Servicers. The country is delayed in transposing a European directive aimed at facilitating NPL sales and increasing transparency in the process. Brussels has already threatened to impose a fine.

“The regulation will be very important for the sale and management of NPLs. Once approved, this law—based on a directive from December 2021 and introduced in Spain with a draft bill in May 2024—will bring much greater certainty to the Spanish NPL market,” says Pérez López, who also notes more activity in RPLs than in NPLs. “Despite the decline in bank NPL ratios, Spain remains a relevant market, which has led to more selective strategies. Still, strong interest in high-yield assets suggests specialized investors remain active. Reperforming portfolios have shown steady momentum, with a slight uptick in interest due to their more controlled risk profile.”

The transposition of Directive 2021/2167/EU—which harmonizes the regulatory framework and strengthens protections—is expected to create a safer and more flexible market, driving increased institutional interest, summarizes Paloma Moreno de la Santa, team director at Baker McKenzie

Original story: El Confidencial | Author: Oscar Gimenez
Edition and translation: Prime Yield

The volume of doubtful loans at Spain’s financial credit institutions (ECFs) dropped to €2.404 billion in June, reaching its lowest level since May 2008, according to the latest data released by the Bank of Spain.

These institutions specialize in specific credit areas such as consumer loans, mortgages, credit cards, guarantees, leasing, and factoring, but unlike traditional banks, they are not permitted to accept deposits.

Most Spanish banks operate their own financial arms to support consumer credit, while other companies—including major supermarket chains and vehicle manufacturers—also run financing entities to offer credit to customers purchasing their products or services.

In June, the stock of doubtful loans held by these financial institutions decreased by €166 million compared to May, and by nearly €2.9 billion year-on-year. This brought their non-performing loan (NPL) ratio down to 5.42%, the lowest since December 2019, before the COVID-19 pandemic, down from 6.03% the previous month and 6.43% a year earlier.

This improvement was supported by an increase of €1.73 billion in new loans granted, pushing the total loan portfolio to €44.3 billion in June, although still €527 million lower than in June 2024.

While ECFs typically have higher delinquency rates than deposit-taking banks, their overall credit volume remains significantly smaller. For comparison, traditional deposit banks reported an NPL ratio of 2.89%, with a loan portfolio totalling €1.13 trillion.

Original Story: Europa Press
Edition and translation: Prime Yield

The non-performing loan (NPL) ratio of Spanish banks fell below 3% in June for the first time since October 2008, according to historical data published by the Bank of Spain.

Furthermore, the NPL rate in June decreased compared to 3.11% in May and 3.43% in the same month of 2024.

In terms of loan volume, the stock of doubtful loans amounted to €36.291 billion, representing a reduction of €955 million compared to May and €4.599 billion compared to June 2024. This also marked the lowest amount of non-performing loans since June 2008.

The decline in the NPL ratio is also explained by an increase in the total volume of credit granted, which reached €1.220 trillion in June. This implies a rise of €23.113 billion compared to May and €27.848 billion compared to June 2024.

On the other hand, data broken down by type of institution show that the doubtful loan ratio for all deposit-taking institutions (banks, savings banks, and cooperatives) ended June at 2.89%, two basis points lower than in the previous month and 43 basis points lower than in the same period of 2024.

In absolute terms, these institutions recorded a decrease of €788 million in their doubtful loan portfolio, down to €33.703 billion. Compared to June 2024, this figure is about €4.129 billion lower.

Meanwhile, credit financial institutions saw their delinquency rate fall to 5.42%, 61 basis points lower than in May, although the year-on-year reduction is one percentage point.

Additionally, the volume of doubtful loans for these institutions stood at €2.404 billion at the end of June, €166 million less on a monthly basis. Compared to the same month last year, the doubtful balance decreased by about €479 million.

Finally, according to the Bank of Spain, total credit institutions’ provisions stood at €27.654 billion, a reduction of €330 million compared to May, while the year-on-year change showed a decrease of €1.598 billion.

Original Story: Europa Press
Edition and translation: Prime Yield

The deal, which could be closed for between 100 and 150 million, would be a cut compared to the 200 million asked for two years ago.

KKR is moving forward in the process of divesting Hipoges, its subsidiary specialising in the management of real estate assets in Spain. As reported by Bloomberg, the US fund is in exclusive negotiations with Pollen Street Capital, a British investment firm that also controls the servicer Finsolutia.

The sale process, which was reactivated at the end of 2023 with the mandate granted to Alantra, has entered its final phase. Although KKR’s initial objective was to reach a valuation of around 150 million euros, sources quoted by ElConfidencial suggest that the deal could finally close at around 100 million. In any case, both figures would represent a downward adjustment compared to the 200 million requested in a previous sale attempt that did not materialise.

After that failed attempt, Hipoges explored the possibility of acquiring Servihabitat – Lone Star’s real estate subsidiary -, an operation which also failed to come to fruition.

Hipoges’ situation has been conditioned by the recent transfer of assets from Sareb to Entidad Estatal de Suelo (Sepes), with the aim of allocating them to affordable rentals. This government decision directly affects the servicer, which in 2021 was awarded the management of a portfolio valued at €25 billion from the so-called ‘bad bank’.

In addition to Pollen Street, other firms such as doValue (owner of Altamira), J.C. Flowers (through Pepper Advantage) and Arrow Global Group (through Amitra Capital) have also shown interest in the transaction.

With a portfolio of more than €50 billion under management, Hipoges remains one of the leading real estate and financial asset servicing platforms in Spain.

Original Story: Iberian Property | Author: Alexandre
Edition: Prime Yield

The Bank of Spain has warned investors in the real estate market that the risk of default in the sector has increased.

This Monday, the Bank of Spain issued a statement warning of an increase in the risk of loan default by non-financial companies, largely driven by the construction and real estate sectors, as well as other services.

‘There has been a slight increase in the probability of loan defaults in recent quarters,’ the bank said in its biannual report on the financial situation of households and businesses. The report states that the probability of defaulting on bank debt has risen by 39 basis points since the third quarter of 2023, increasing from 2.14% to 2.5%. However, this figure remains 25 basis points below the 2022 average.

Of these 39 basis points, 31 rose in the fourth quarter of last year, while the remaining eight points rose in the first half of 2025. This trend was observed across companies of all sizes.

Nevertheless, the deterioration in credit quality was somewhat more pronounced among large companies, with a 51-basis-point increase in the probability of default from the third quarter of 2024 to reach 2.03%. This figure is approximately 50 basis points below the average for non-financial companies overall, according to Europa Press.

What has happened?

The recent increase in the probability of corporate default has mainly been driven by growth in the construction and real estate sectors, as well as other services. In fact, the average risk of default in these sectors has increased by 44 and 96 basis points respectively since the third quarter of 2024.

Conversely, credit risk has risen slightly in the trade and hospitality sectors, reaching nine and twelve basis points above the third-quarter 2024 probability of default in the first quarter of 2025.

Nevertheless, the Bank of Spain has warned that the data ‘do not indicate a significant increase in tail risk, as the proportion of credit classified in the highest risk category has remained at levels similar to those in 2022’.

Regarding the increase in risk in the construction and real estate sectors, the agency explained that the deterioration is due to ‘an increase in the risk associated with the credit balance, assuming a constant debt structure and borrower composition’.

Original Story: El Economista
Edition and transalation: Prime Yield

Photo: Jorge Fernández Salas at Unsplash

The volume of non-performing loans (NPL) fell to 37.926 billion, which is 10% less than a year earlier.

According to provisional data published by the Bank of Spain, the Spanish banking sector’s NPL ratio continued to fall in the fourth month of the year, reaching 3.18% — its lowest level since October 2008, when it stood at 2.92%.

This was also a decrease compared to March, when the default rate was 3.21%, and April 2024, when NPL accounted for 3.60% of the credit stock.

The volume of doubtful loans fell to €37.926 billion in April, which is €354 million less than in March and €4.22 billion less than in April 2024.

This decline in NPL is accompanied by an increase in the total amount of loans granted in Spain. During April, the total stock of loans granted was €1.193 trillion, representing an increase of around €2 billion compared to March, and around €22 billion compared to April 2024.

Breaking the data down by type of institution, the NPL ratio for all deposit institutions (banks, savings banks, and cooperatives) was 3.08% in April, which is three basis points lower than the previous month and almost 40 basis points lower than in the same period in 2024.

In absolute terms, this type of institution recorded a €351 million decrease in its NPL portfolio, bringing it to €35.201 billion. Compared to April 2024, this is about €3.702 billion lower.

Meanwhile, credit institutions saw their NPL ratio rise to 5.99%, an increase of 20 basis points compared to March, though the year-on-year reduction remains at over one percentage point.

The volume of NPL for this type of institution was €2.538 billion at the end of April, which is €15 million less than the previous month. Compared to the same month last year, the non-performing balance fell by around €527 million.

Finally, according to data from the Bank of Spain, provisions for all credit institutions totalled €28.548 billion in March, which was a decrease of €37 million compared to the previous month. The year-on-year variation showed a reduction of €1.49 billion.

Original Story: Diário Publico | Author: Europa Press
Edition and translation: Prime Yield

AltamarCAM Partners, through its management company Altamar Private Equity SGIIC, has officially launched and registered with the CNMV its new fund of funds for secondary investments: ACP Secondaries 6 FCR, with a target total committed capital of €1.3 billion. This vehicle is part of the global ACP S6 programme, which will also include parallel vehicles and complementary structures managed or advised by the group.

According to data from Lazard, the global volume of transactions in the secondary market reached $150 billion in 2024 and could reach $200 billion in the next two years. The launch of the new fund comes a few months after Altamar announced, last February, the closing of ACP Secondaries 5, after reaching €1.6 billion in committed capital. The firm is currently among the top 20 secondary fund managers worldwide, in a market dominated by Ardian. Altamar already manages more than €20 billion in assets and has set itself the goal of doubling that figure within five years.

ACP Secondaries 6 is designed to invest predominantly in secondary transactions in private equity funds, selecting mainly international underlying funds — buyouts, growth and venture capital — as well as complementary private assets, including infrastructure and distressed debt.

The fund’s investment strategy is based on three pillars: secondary transactions, co-investments and primary (on and opportunistic basis). Regarding the secondary transactions, the vast majority of investments will be made in the secondary market for private equity fund interests, where Altamar has extensive experience. As for co-investments: up to 20% may be allocated to direct co-investments with other funds or strategic partners. Last, a limited and selective exposure to primary transactions is envisaged.

In terms of geographical scope, ACP Secondaries 6 will take a global approach, with a primary focus on Western Europe, the United States and emerging markets, without setting minimum or maximum limits per region.

The fund may invest up to 100% in other venture capital entities in accordance with Law 22/2014 (LECR) or equivalent foreign entities, while also retaining the possibility of co-investing directly in target companies alongside such entities.

ACP Secondaries 6 also contemplates the creation of parallel vehicles to adapt to the regulatory, tax or structural requirements of different types of investors. All investments will be made under substantially equivalent conditions between the main fund and its associated vehicles.

This new strategy reinforces AltamarCAM’s position as one of the key players in the European secondary fund investment market, combining access to quality opportunities with a focus on global diversification and risk control.

Original Story: Capital Riesgo
Edition and translation: Prime Yield

The combination of interest rates being stuck at zero per cent for years and a credit crunch at some point in the cycle created the ideal conditions for financing and investment outside the banking sector to flourish. In fact, the expansion of the non-banking financial sector has far outpaced the growth of the banking business over the last decade in both Spain and Europe. This has not gone unnoticed by regulators, as the phenomenon poses clear challenges to financial stability.

In Spain, this activity already accounts for 33.8% of the financial system’s total assets, although this figure remains far below the 59.9% represented by the non-banking financial sector in the euro area. According to data from the Bank of Spain, at the end of 2024 the total unconsolidated assets of banks and the non-banking financial sector in the domestic market amounted to €3.09 trillion and €1.58 trillion respectively.

In the euro area as a whole, these figures were €38.56 trillion and €57.49 trillion for the banking and non-banking sectors, respectively. However, what is particularly significant about this phenomenon is the pace at which it is advancing. While total assets managed by banks in Spain grew by almost 10% between 2015 and 2024, those channelled through the non-banking sector increased by around 25% — more than double.

According to the latest Financial Stability Report published by the Bank of Spain, the increase was 30% and 40% respectively over the last decade in the eurozone.

The term ‘non-banking’ encompasses ‘shadow banking’, which is not subject to the strict requirements imposed on financial institutions, as well as a long list of regulated and supervised operators, including insurance companies, pension funds, money market and non-money market funds, credit institutions, securitisation funds, and securities companies and agencies. This also covers the activities of venture capital companies, SOCIMIs, payment institutions, appraisers, and instrumental subsidiaries that issue securities.

In its latest annual report for 2024, the ECB acknowledges that the non-banking sector (IFNB) maintained its resilience to market volatility and supported market financing across all credit risk categories in the euro area. However, the report also notes that ‘vulnerabilities related to exposure concentration, liquidity mismatches, and high leverage in certain areas of the investment fund sector continue to be a cause for concern’.

Among the risks it monitors are sharp changes in valuations, which could lead to sudden fund outflows and margin calls, amplifying adverse market dynamics and causing spillover effects to other parts of the financial system.

According to the Financial Times, EU regulators are planning the first stress test to identify vulnerabilities in the non-bank financial system in the event of a worsening market crisis. This would include private equity firms, hedge funds, money market funds, insurers and pension funds, following a similar exercise carried out by the Bank of England last year.

The aim is to examine how a crisis would spread among the different parts of the financial system, and whether it could magnify the impact rather than absorb it.

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