Together with KKR, its reference shareholder, Hipoges has created a vehicle to invest in mortgage debt. Starting with an initial endowment of €100 million, it will focus on the acquisition of small portfolios of non-performing loans (NPL) and real estate owned (REO) in Spain and Portugal through transactions of between €5 million and €25 million. The idea began to take shape at the end of 2023, crystallised last summer with the assembly of the corporate structure to complete its first purchase, and since September has already completed four transactions, reveals to elEconomista.es Pelayo Puche, Executive Director Advisory of Hipoges and promoter of the vehicle.

The fund, called PSD Lux, ‘is the first company that Hipoges has created specifically to actively buy portfolios’, he explains. It is common for servicers to co-invest with their clients in order to ‘align interests’, and Hipoges has done some similar deals in the past, although they are almost exceptional and for very limited amounts. To date, it has not actively sought to acquire portfolios. Its plan for 2025 is to use the expertise it has acquired over the years in managing large portfolios in the banking sector to focus on developing business with financial institutions.

The rationale behind this commitment is that it sees an opportunity in “three very clear needs” in the market. Firstly, it wants to offer an additional service to bank clients for whom it already manages distressed portfolios: “Our usual clients have a portfolio size above which they do not pay attention because it is not big enough and the work involved in valuing a small portfolio is practically the same as that of a large one,” says Puche. In other words, there are neglected portfolios that he wants to pay attention to and thus strengthen the relationship with existing or new clients.

On the other hand, he sees opportunities in the secondary market, buying portfolios that the banks have sold long ago and which, after being managed for five, six or eight years, “are also starting to get too small and the owners, the funds that bought them at the time, are starting to stop paying attention to them because they are too small”. These are the so-called ‘tail’ portfolios, and his vision is twofold: to acquire such portfolios from client funds, so that ‘they keep the management in Hipoges’, and to ‘get a bit more assets under management’ by bidding for similar portfolios that the funds have with other servicers. Since the launch of the new vehicle, the company has closed four deals on bank assets that had not previously come to market, all with Spanish companies. Closing four will take us to 40 since September,” he says.

Movements in the sector

 The launch of the vehicle comes at a time when servicers are reinforcing or redefining their strategies in order to improve their positioning, also in the midst of the concentration process that the sector has been undergoing for several years and which could possibly include KKR’s exit from Hipoges. According to some media reports, the US giant has sounded out the appetite for the servicer, attracting the interest of funds such as DoValue, Arrow Global Group, J.C. Flowers & Co and Pollen Street Group. KKR bought 84% of Hipoges in 2017, with the rest of the capital in the hands of several of the servicer’s executives. An exit, which does not necessarily have to be completed, would be part of the natural turnover of assets in private equity firms. The company declined to comment on the hypothetical transaction.

The alliance with KKR confirms the good understanding with the shareholder, who did not want to abandon the project, while Hipoges continues its strategy of greater diversification in order to strengthen its market position and reduce its dependence on the core business of maintenance, with which it started operations in Spain in 2008. In fact, the creation of the fund is an initiative of Hipoges, whose teams will be even more responsible for the assets it incorporates. The paradigm shift with PSD is that they give us much more independence than we would have in a large portfolio. They put in almost all the capital, but they do less work than they would in a normal portfolio, they delegate more to the Advisory and Hipoges team,’ says Puche.

The €100 million in the vehicle is a start-up budget. The idea is to try to invest €100 million in the first year or two, and after that we will see how it goes and KKR will decide whether to give another 100 million or what to do,’ he says. The only asset class a priori ruled out for the fund is unsecured or consumer credit. Its preference is for assets that are in line with Hipoges’ core business, which is very much focused on residential mortgages for individuals, as well as corporate loans, especially to developers, and real estate. In terms of financing, the fund’s appetite includes both NPLs and refinancing or current loans, even if they have had a certain incidence in the last year (the so-called RPL or reperforming loans).

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

Sareb has decided to suspend its housing sales activities for the next few weeks in view of the future transfer of its assets to the new public housing company to be created on the basis of the existing Entidad Pública Empresarial de Suelo (Sepes). According to El Economista, this decision will have a clear impact on the administrators Hipoges and Anticipa/Aliseda, who are in charge of selling these assets, which form part of the portfolio of the so-called bad bank, and whose mandate ends in August.

According to the newspaper, in the next few days Sareb’s board of directors will meet and a shareholders’ meeting will be convened to approve the cessation of commercial activity in the residential sector and to begin a period of analysis to define the scope of the assets to be transferred to the new public entity.

However, it seems that not all of the housing portfolios will be transferred, as initially announced, as it will be studied which properties make sense for social rental use, as the public company will give them.

Although most of Sareb’s portfolio is perfectly suitable for conversion to social rental housing, ‘there are specific developments or unique assets that, because of their location or nature, would not make sense to transfer to the new entity’, the sector explains.

Sareb itself must have a minimum level of income to keep its machinery running, not only for its own survival but also to be able to provide the new public entity with more housing. However, it is not clear to anyone that this slowdown in sales will have an impact on the business of the service providers responsible for this mission.

In 2022, the award of management and marketing services will swell the portfolio of properties and loans to around 25.3 billion euros.

Original Story: El Economista | Author: Alba Brualla
Edition and translation: Prime Yield

The Spanish banks’ non-performing loan (NPL) ratio stood at 3.32% at the end of December, the lowest level since November 2008 when it was 3.21%, according to preliminary data published by the Bank of Spain.

This is the fourth consecutive monthly fall: compared with November, it fell by six basis points, while compared with December 20-23, it fell by 22 basis points.

In terms of the volume of NPL, it fell to EUR 39,358 million in December, EUR 939 million less than in the previous month. Compared to December 2023, the reduction is  EUR 2,510 million.

In addition, the total stock of loans has also decreased: at the end of December the ‘stock’ stood at EUR 1.18 trillion, a decrease of around EUR 7,414 million compared with November. On the other hand, compared with December 2023, the volume of bank loans increased by EUR 4 025 million.

The data broken down by type of institution show that the ratio of doubtful assets of all deposit-taking institutions (banks, savings banks and cooperative societies) closed December at 3.24%, two basis points lower than in November and 20 points lower than in the same month of 2023.

For the twelfth month, the portfolio of doubtful assets of this type of institution decreased by EUR 612 million to EUR 36,599 million. Compared with December 2023, this figure is around EUR 2,169 million lower. For their part, financial institutions saw their NPL ratio fall to 5.65% in December, more than one percentage point lower than in November. Compared with December 2023, it fell by 68 basis points.

In absolute terms, the volume of doubtful loans of this type of institution was EUR 2,565 million at the end of December, EUR 344 million less than in November. Compared to the same month of the previous year, the doubtful balance was reduced by EUR 346 million.

According to the Bank of Spain, provisions for all credit institutions stood at EUR 28,902 million in November, a reduction of EUR 491 million on the previous month. Compared to the previous year, provisions decreased by EUR 968 million.

Original Story: Europa Press
Edition and translation: Prime Yield

The ratio of doubtful assets of financial credit institutions (EFCs), which specialise in consumer credit, closed below 6% in 2024, returning to pre-crisis lows, according to preliminary data published by the Bank of Spain.

Specifically, SCIs closed with a ratio of 5.65%, the lowest level since January 2020, according to the historical series published by the regulator. Compared with November, the fall is 1.07 percentage points, while compared with December 2024, the reduction is 68 basis points.

In terms of volume, the stock of doubtful assets of SCIs amounted to EUR 2,565 million at the end of December, EUR 344 million less than in November. Compared with the same month last year, the stock of doubtful assets was reduced by EUR 346 million.

The total amount of loans granted by financial institutions at the end of December was EUR 45,369 million, EUR 2,086 million more than in November. Compared with the same month in 2023, however, the volume of loans fell by EUR 601 million.

Lastly, the provisions of the SCIs to cover the doubtful balance stood at  EUR 1,776 million in December, EUR 83 million less than in the previous month and EUR 57 million less than the reserves in December 2023.

Original Story: Europa Press
Edition and translation: Prime Yield

The Council of Ministers approved the Credit Purchasers Act, which transposes the European Directive on the same subject and amends the Consumer Credit Contracts Act and the Real Estate Credit Contracts Act. The aim is to regulate the market for the purchase and sale of non-performing loans and to introduce certain obligations for mortgage and consumer credit borrowers.

Specifically, the bill regulates the purchase and sale of non-performing loans (NPL) granted by credit institutions and financial credit institutions, establishing common rules with the rest of the European Union.

The next step, once approved by the government, will be to send it to the Congress of Deputies for parliamentary processing.

Firstly, it regulates the activity of doubtful credit management, which consists of the collection or renegotiation of this type of credit, which becomes a reserved activity and requires prior authorisation from the Bank of Spain. In order to obtain this authorisation, the law establishes the need to have an “adequate” internal credit management system and a policy that “guarantees the protection and fair treatment of borrowers”.

It also regulates the purchase and sale of NPL, ensuring that the conditions and rights of borrowers are maintained and transferring to the purchaser of the loans the obligations of transparency, protection and information, including compliance with the codes of good practice to which the original creditor has subscribed.

The draft regulation sets out additional safeguards for the protection of borrowers, requiring both purchasers and servicers to provide “fair treatment and adequate information”, as well as an “adequate” borrower assistance and out-of-court redress service.

In order to ensure compliance with these obligations, the Banco de España will supervise the administrators, as well as the compliance of credit purchasers with these obligations, and will establish the corresponding system of infringements and sanctions.

Real estate and consumer credit

The sectoral regulations on consumer credit and real estate credit will also be amended to introduce the obligation for creditors to have a debt renegotiation policy. This means that creditors will have to offer their customers measures aimed at reaching renegotiation agreements before taking legal action or demanding full payment of the debt.

The regulation establishes special conditions for non-mortgage debtors in a situation of economic vulnerability who are recipients of the minimum subsistence income. In these cases, the lender who sells the doubtful loan to a third party must offer the borrower a payment plan in order to “protect the most indebted groups without undermining the payment culture”.

The Consumer Credit Law also introduces a limit on the amount of default interest that can be charged in the event of non-payment by the consumer, setting it at a maximum of the sum of ordinary interest plus three percentage points.

In addition, charges for the recovery of overdue amounts must be in line with the costs actually borne by the creditor and, in any event, after prior notification to the consumer, indicating the outstanding amount, the time available to settle the situation and the amount to be paid if the situation is not settled.

The cases of modification of the interest rate in contracts of indefinite duration (as in the case of revolving cards) are defined, allowing the customer not to accept the increases or to cancel the contract, in which case the customer may repay the outstanding debt in accordance with the repayment conditions and the interest rate in force at the time of the notification, at no additional cost to the borrower.

Finally, it clarifies the conditions of compensation for early repayment in the case of financing linked to the purchase of goods or services.

Original Story: MSN News Author: Europa Press
Edition and translation: Prime Yield

Cajamar has completed a new sale of a an NPL portfolio. The company has placed the EUR 17.5 million Atenea II portfolio with specialists Goriz Advisor and Gannet. According to market sources, the portfolio consists of 200 NPL (non-performing loans) with mortgage guarantees.

The bank, like most banks, has been removing non-performing assets from its balance sheet for years in favour of funds and specialist investors in order to improve its risk profile. Until last year, it also had an agreement with Haya Real Estate, the servicer acquired by Intrum, for the management of its assets, but when it expired it decided not to renew it in order to deal directly and internally with its own resources.

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

Santander continues to reduce its exposure to non-performing assets. According to market sources, the bank has sold a EUR 90 million portfolio of secured non-performing loans (NPL) to KKR as part of the Project Rock transaction.

This is not the first time it has placed assets with the fund. In 2023, KKR acquired a portfolio of nearly €200 million of foreclosed real estate (REO) that the Cantabrian bank had put on the market in the so-called Frankel transaction.

The bank has remained in the market as one of the most active and recurrent operators in this type of sale, closing deals with investors such as Fortress, PRA Iberia, Cerberus and Axactor, among others.

In recent months, it has completed the sale of around EUR 330 million in unsecured loans and other secured financing operations in the Swing project; the sale to Fortress of the Churchill portfolio, with a gross nominal value of EUR 200 million; and the sale to Balbec Capital of the Newman portfolio, which in its case consisted of real estate assets, secured loans and a portfolio of unsecured loans from its subsidiary Santander Consumer Finance.

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