The end of the year brought unusual turmoil to the non-performing loan (NPL) market in Portugal. At least seven banks are in the process of selling portfolios of toxic loans worth EUR 1.3 billion, according to information gathered by ECO from various market sources.

These transactions should be completed by the end of the year, one of the sources said. This is in line with the opinion of several analysts consulted by ECO: banks are making a last-ditch effort to clean up their balance sheets before the 2024 accounts are closed.

The biggest operation is by Caixa Geral de Depósitos (CGD), which has put up for sale a portfolio of unsecured NPL worth EUR 460 million under the name Projeto Moon.

Crédito Agrícola has two NPL sales processes underway with a total value of around EUR 280 million: Projeto Lyra, worth EUR 93 million of secured loans  and Projeto Leo, worth EUR 183 million of unsecured loans.

The Crédito Agrícola group is the one that is lagging behind in reducing bad debts (compared to its peers) and is now more active in the market to try to catch up. An official source confirmed that ‘it has sales processes underway that are at an advanced stage, aimed at reducing exposure to NPLs and expected to be completed in 2024′. The ongoing processes are part of the planned implementation of the strategy to reduce exposure to NPLs and will be accompanied by other complementary measures to reduce exposure,’ the bank said.

Novobanco is selling a NPL portfolio worth EUR 250 million.

Santander Totta has a large single-name portfolio on the market called Summer, worth EUR 160 million. According to a source, the bank is likely to abandon this transaction.

Banco Montepio has also launched Projeto Sado, a portfolio of unsecured NPL worth EUR 68 million.

With smaller portfolios, BCP and Bankinter/Universo were put up for sale.

The NPL ratio in the national system fell from a high of 17.5 per cent in 2015 to less than 3 per cent at the end of June. But there were still EUR 8.5 billion in NPL, according to the latest figures from the banking regulator.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

The State’s bank CEO, Paulo Macedo, has revealed that Caixa Geral de Depósitos (CGD) is going to put a new portfolio of unsecured non-performing loans (NPL), totalling a nominal value of 440 million euros, up for sale.

Despite its low NPL ratios, Caixa Geral de Depósitos is still going to clean up its balance sheet. The bank will put a portfolio of Non-Performing Loans (NPL) worth 440 million euros on the market this quarter, revealed Paulo Macedo, at the presentation of the quarterly results.

It already has a name. It’s the ‘Moon portfolio’, and it’s made up of old loans, known as granular, without guarantees (unsecured).

At the end of September, the consolidated NPL ratio was 1.59%, down from 1.65% in December

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

The bank led by Mark Bourke continues to sweep the corners of the balance sheet before going ahead with the sale. It has placed on the market a portfolio of unsecured loans worth 300 million euros.

With strides towards sale, Novobanco continues its efforts to clean up its balance sheet. In the last few weeks it has put up for sale a portfolio of bad debts with a book value of 300 million euros, according to information gathered by ECO. Other banks such as Santander, BCP and Crédit Agricole are also on the market with operations totaling 400 million euros.

In the case of the bank led by Mark Bourke, the portfolio in question is made up of so-called “unsecured” loans; loan contracts without associated guarantees, which should remove some investor appetite for this so-called “Pegasus” portfolio. Interested parties had to express their interest by the beginning of this month. The process is continuing and the bank expects completion by the end of the year, according to what it announced to the market.

This effort to clean up the balance sheet is not unrelated to the plans that the bank (Lone Star, which holds 75% of the capital) has for the near future.

At the moment, Novobanco and the Resolution Fund are negotiating an early end to the contingent capital mechanism, which was created in 2017 when the bank was sold to the American fund and which will only end at the end of next year, in a move that will open the door to dividends and sales, something that is expected to happen in the first half of next year.

As ECO reported at first hand, the Ministry of Finance already has a version of the contract to put an end to the agreement, which will mean that the bank and the fund already have a basis for understanding. For Minister Joaquim Miranda Sarmento, there is even a great incentive to endorse the early termination of the mechanism:dividends of 250 million euros to the public coffers, which should result from the release of a thousand million euros of excess capital that Novobanco has accumulated over the last four years.

With the end of the dividendban, It is true that the major effort took place from the moment it was sold to Lone Star, taking advantage of the guarantee of loss coverage that the contingent capital mechanism provided between 2018 and 2021, having injected around 3.4 billion euros into the bank.Since 2016 until June, this effort has resulted in a reduction in the NPL (non-performing loans) ratio from 33.6% to 4.1%.

Even so, Novobanco still had 1 billion euros in non-performing loans on its balance sheet at the end of the first half.

A hectic end to the year in banking

The non-performing loans market is going through a hangover period after the massive sales of large portfolios (starting with Novobanco) in recent years.

But the last few months of the year brought some excitement with several banks active on the market. BCP has just sold the Spring Project, worth 265 million euros, with loans from Inapa and the promoter of the Algarve Autodrome, and has now put the Lyra Project up for sale, worth 90 million euros.

As the ECO also reported, the Crédit Agricole is also in the process of selling off a portfolio worth 93 million euros, mainly to small and medium-sized enterprises (SMEs).

Santander Totta (140 million euros), Bankinter (30 million euros) and Banco Montepio (amount not yet determined) are also in the market, according to various sources obtained by the ECO.

Santander Totta (140 million euros), Bankinter (30 million euros) and Banco Montepio (amount not yet determined) are also in the market, according to various sources obtained by the ECO.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

The market for the sale of non-performing loans by banks is accelerating. Santander has just put up for sale an NPL portfolio worth 160 million euros, made up of loans to large debtors.

Banco Santander Portugal has just put up for sale a portfolio of non-performing loans (NPLs) worth 160 million euros, the majority of which is made up of loans to large debtors (single names).

This NPL portfolio is mixed, between secured and unsecured, but the largest positions are loans with guarantees, Económico understands.

The bank declined to comment.

The market for banks to sell non-performing loans is accelerating at a time when the government says it has a legislative proposal to transpose the directive on credit managers and purchasers, with the aim of ensuring consumer protection. This is a European requirement.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

Crédito Agrícola has just put up for sale a portfolio of non-performing loans (NPL) worth €93 million, the majority of which belong to small and medium-sized enterprises (SMEs), according to information gathered by ECO from market sources.

The sale includes a stake of secured operations, i.e. contracts with guarantees, 65 per cent of which correspond to NPL for SMEs, according to the same sources.

An official bank source confirmed that the ongoing market consultation process, which is expected to be completed in 2024, is part of the planned implementation of the strategy to reduce exposure to NPLs.

The group led by Licínio Pina has seen its assets decline recently due to high interest rates. In June, the NPL ratio reached 6.5%, up 0.3% from last year. This is more than double the national average of below 3%.

This was an increase of €36.4 million to 765.3 million, with over half (410.5 million) corresponding to SME NPLs. The portfolio on the market represents approximately 12 per cent of the NPL stock. By the end of June, the total amount of money set aside to cover NPLs was 293.3 million. This meant that 38.3% of NPLs were covered.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

The Balbec – LX Partners consortium, the UK fund LCM Partners and Arrow Global are the three candidates selected by BCP to submit binding offers for the purchase of a €90 million portfolio of non-performing loans (NPL) from the bank headed by Miguel Maya.

The so-called ‘Swift project’, which consists of unsecured NPLs, will receive binding offers on 18 September, according to Jornal Económico.

Earlier this year, BCP sold a €265m portfolio of single names, or loans from major clients in default, known as the Spring project, which our sources say was bought by Arrow Global.

The Balbec – LX Partners consortium, the UK fund LCM Partners and Arrow Global, who are in pole position to buy the Swift project, are the same candidates to buy a portfolio of non-performing loans from the KKR fund, called the Nata project, which consists of the resale of a portfolio bought by Novobanco in 2018, made up of NPLs with guarantees (secured), and whose binding proposals must be submitted on 2 October.

Fonte: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

Alternative asset manager Balbec Capital Management has bought a portfolio worth over €4 billion of soured Portuguese loans from Luxembourg-based LX Partners, according to a statement seen by Bloomberg News.

The portfolio has more than 300,000 restructured and non-performing loans (NPL), and its purchase is one of the largest such loan transactions in recent years, Balbec said. It’s one of the biggest portfolio purchases of NPL for the firm since it was founded in 2010.

About two-thirds of the portfolio consists of unsecured debt, such as loans to small and medium-sized businesses, according to Balbec. The secured portion, which is one-third of the portfolio, consists of residential mortgages and other real estate loans.

Balbec has expertise with “credit-intensive” assets such as NPL, one of the reasons why this portfolio is an attractive purchase, the firm said in a statement. The company is re-entering the Portuguese market with this deal.

There may also be an opening to buy these types of loans now. Other lenders that focus on such loans have lately been preoccupied with refinancing their own maturing corporate debt or are looking for opportunities outside Portugal, the firm said.

“Portugal looks particularly attractive to us now because there’s an ample supply of non-performing and semi-performing loans and less competition on the demand side,” Balbec said in a statement.

Many of the loans were originally made by banks and other lenders before later being sold to LX Partners, which invests in a variety of assets, including performing and non-performing assets.

Going forward, Balbec and LX will jointly work on bids for secured, unsecured and mixed portfolios, with LX providing the servicing, according to Balbec.

Original Story: Bloomberg | Author: Scott Carpenter
Edition: Prime Yield

It corresponds to the bank’s unsecured financing in Portugal.

Abanca has gone to the market to sell a 75 million euro portfolio of non-performing loans (NPLs).

The loans are based in Portugal and are unsecured, according to Bloomberg, which reported the news. They correspond to loans granted by Abanca in Portugal, one of its target markets.

Last November the bank, controlled by the Venezuelan Juan Carlos Escotet, decided to buy the Portuguese EuroBic in order to expand its presence in Portugal. This acquisition multiplies Abanca’s number of customers by four and its business volume by three.

At the end of March 2024, the latest data available, Abanca’s balance sheet stood at 74,815 million euros. Its NPL ratio was 2.5%, equivalent to a total of 1,133 million euros. At the end of 2023, the coverage of doubtful assets reached 73.9%, i.e. 1,130 million euros, with provisions of 834 million euros.

Original Story: Expansión
Edition and translation: Prime Yield

Banco Montepio has sold the so-called “Zêzere Project” to LX Partners, reports Jornal Económico.  LX Partners, Fortress, CRC and LCM Partners were the bidders in this operation.

It was not possible to obtain the value of the deal, but it involved a bad debt portfolio with a book value of €120 million and which included two tranches, one of secured credit (with guarantees) worth €57 million, corresponding to 120 individual debtors and another 150 from small and medium-sized enterprises (SMEs), and whose collateral made up of real estate assets was valued at around 80 million; and another tranche of unsecured credit (without guarantees) worth €63 million from SMEs, 60 per cent of which will be insolvent.

The deal was advised on the sales side by KPMG.

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

BPI has sold a bad debt portfolio worth around 73 million euros, the financial institution said in a statement.

“BPI concluded, through a competitive process, the sale of a portfolio of non-performing loans, with a total gross value of close to 73 million euros,” reads the document.

The non-performing loans (NPLs) were sold to a credit fund managed by a UK-based company and include positions with and without real mortgage guarantees, involving around 18,200 credit contracts and around 4,700 customers.

At the end of the first quarter, the non-performing exposures ratio of the bank led by João Pedro Oliveira e Costa was 1.6 per cent.

Original Story: Jornal de Negócios | Author: Hugo Neutel
Edition and translation: Prime Yield

The significant increase in the cost of loans for families has raised fears of an increase in defaults. However, the data shows that non-performing loans (NPL) ratio is stable, remaining at historically low levels.

In the first four months of the year, €10.4 billion in new loans were granted to families, according to figures released by the Bank of Portugal. This value represents growth of over 17 per cent compared to last year and puts the volume of new financing at the highest level since 2003.

Unsurprisingly, the lion’s share of financing is for housing. Over the four months, almost €7.5 billion were financed in new operations, which represents an increase of 16 per cent compared to 2023 and corresponds to the best first four months since 2003.

It should be emphasised that these new operations include the credit transfers that many families decided to make, finding more attractive financing solutions at different banks. This in a period still marked by the impact of the sharp rise in interest rates seen throughout 2023.

Consumer credit, on the other hand, absorbed almost €2 billion in the first four months of the year, which represents a 10 per cent increase on last year.

It’s important to emphasise that throughout these months, the amount financed has fluctuated slightly, increasing and decreasing, with no consistent trend over the months.

In terms of housing loans, only 0.3 per cent of the total volume of loans granted is overdue, thus remaining at historically low levels. Only in February and March of this year did this ratio reach 0.2 per cent, a level it had never reached before. In April it rose slightly.

In total, there are 260.2 million euros in nonperforming home loans within the Portuguese banking system, a figure that represents a slight rise, but which keeps the level of household defaults at historic lows.

In the consumer credit and other purposes segment, defaults correspond to 2.7 per cent of the total financing granted, which also represents a slight increase compared to March (2.6 per cent),but corresponds to a low level considering the data since 2003.

Original Story: Doutor Finanças | Author: Sara Antunes
Translation and edition: Prime Yield

Bank credit granted to families that is classified by Portuguese banks as being in default or on the verge of default (failure to pay within the agreed period) soared by almost 13 per cent in 2023, one of the highest figures in recent years, indicates the Bank of Portugal (BdP) in the new Financial Stability Report, published this Tuesday. According to the analysis by the central bank governed by Mário Centeno, the problem is essentially concentrated among poorer or lower-income families, who are finding it increasingly difficult to honour their instalment payments to the bank.

This problem – referred to as ‘stage 2 credit risk categories’, i.e. those that are in the corridor of potential default (non-performing loans or NPLs, whose customers fail to pay, which also includes non-performing loans, loans that have been unpaid for more than 90 days) – is a growing problem and is causing concern among the BdP.

The increase in level 2 credit at risk affects the consumer segment proportionally more, but it is in housing loans that the situation has deteriorated the most, warns the BdP.

‘Although the total ratio of non-performing loans (NPLs) continued to fall in 2023, from 3 per cent to 2.7 per cent of total loans, the truth is that there seems to be a more serious problem brewing.

‘Across the main institutions, the ratio of loans to individuals in stage 2 increased by 2.2 percentage points (p.p.) to 10.4 per cent, revealing the vulnerability of lower-income families to tighter monetary conditions,’ warns Centeno’s institution.

Original Story: Diário de Notícias | Author: Luís Reis Ribeiro
Edition and translation: Prime Yield

Novobanco has a €20 million debt from a single name up for sale on the market. In addition, Banco CTT, BPI, BCP, Montepio and Santander have non-performing loan (NPL) portfolios for sale. The NPL market is buzzing again.

The banks have not yet seen a deterioration in the quality of their loan portfolios despite the rise in interest rates, but they are no less active in selling NPL portfolios.

According to Jornal Económico, Novobanco has sold a loan (single name) worth €20 million euros. The loan is known in the market as “Schmidt”, probably referring to the name of the debtor.

But it’s not the only bank selling NPLs.

Banco CTT’s “Boavista Project” (more specifically, 321 Credit), worth €109 million, is in the binding offer phase.

Banco Montepio’s “Zêzere Project”, with a book value of €120 million, is also in the binding offer phase and is being advised by KPMG.

The portfolio consists of two tranches. One of €62 million of NPL without real guarantees (unsecured) and another secured tranche (with guarantees) totalling €57 million.

Three candidates have already been selected to proceed to the binding proposal phase of the “Zêzere Project”, the name given to the portfolio of non-performing loans (NPLs) that Banco Montepio has put up for sale. As reported by JE, LX Partners, Fortress, CRC and LCM Partners have been selected to submit binding offers. The deadline for submitting binding offers is 7 June. Regarding this tender, market sources are outraged that Hipoges is in the running with Fortress for Montepio’s portfolio, while at the same time “managing the portfolio for the bank”. This “gives them a competitive advantage over other bidders”, they say.

Montepio’s non-performing loan portfolio consists of 120 individual debtors and a further 150 loans to small and medium-sized enterprises (SMEs), secured by property worth 80 million.

The unsecured part consists of SME loans, 60% of which are in a very difficult situation.

The portfolio offered for sale by BPI is also in the binding offer phase. Bidders will submit their offers on Tuesday 28th. The “Copper Project” is a mixed NPL portfolio worth €85 million, of which €62 million is unsecured NPL and €12 million is secured credit. The portfolio also has €11 million of loans from large debtors (single names).

Santander Totta’s bad debt portfolios also have a deadline for submitting binding proposals on 28 May. The bank launched two portfolios, Pool 62 and Pool 63. The first portfolio has a value of €70 million and is made up of unsecured loans. Pool 63 has a value of €30 million and is made up of NPL with guarantees (secured).

The process of selling the largest NPL portfolio on the market is further behind schedule. BCP received non-binding offers for its “Spring Project” worth €264 million last Thursday, 23 May. This portfolio is made up of NPL from large debtors.

In total, the six banks have €695 million worth of impaired loans on the market.

As an Alvarez & Marsal analysis of the Portuguese banking sector revealed, despite the increase in the cost of risk between 2022 and 2023, “the quality of the credit portfolios remained robust with improvements in the NPL and coverage ratios”.

Portuguese banks exceed the EU average of 1.8 per cent in NPL ratio, but their coverage level more than doubles the EU average of 42.9 per cent.

The NPL ratio fell from 3.18 per cent to 2.59 per cent at the end of last year, with the improvement driven by a 16 per cent reduction in problem loans. Coverage by impairments and collateral exceeds 100 per cent, which shows an even more conservative approach than in 2022.

Original Story: Jornal Económico | Author: Maria Alves
Edition and translation: Prime Yield

Montepio and BPI, which already had two portfolios of €200 million in the market, were joined by BCP, Santander Totta and Banco CTT with NPL portfolios of around €500 million.

According to information gathered by ECO from market sources, Portuguese banks have non-performing loan portfolios (NPL) worth almost €700 million up for sale.

At the beginning of April, ECO reported that Banco Montepio and BPI had already launched two processes for the sale of NPL portfolios worth €200 million.

These two banks have been joined in recent weeks by BCP, Santander Totta and Banco CTT, with portfolios with a gross book value of around €500 million.

BCP has the largest portfolio: Project Spring is worth €265 million and is made up of single names, i.e. large exposures that are in default.

Santander Totta launched two portfolios simultaneously: Pool 62 and Pool 63. The first portfolio has a value of €70 million and consists of unsecured loans. The second has a value of €30 million and is made up of secured loans.

Banco CTT’s Boavista project, worth €100 million, has only unsecured NPLs. The bank confirmed that it had carried out an “organised market consultation for the sale” of an old portfolio of 321 Crédito, an institution specialised in consumer credit, acquired in 2018.

None of the other banks would comment on the transactions.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

In 2023, the banking sector became fatter. According to the Bank of Portugal, profits increased due to interest income, and as a result profitability grew, capital was strengthened and the efficiency ratio also improved.

Banking profitability “continued its growth trajectory with return on equity (ROE) standing at 14.8 % in annual terms”, 6.14 percentage points more than in 2022, says the Bank of Portugal in its quarterly analysis of the Portuguese banking system.

This growth reflects the increase in net interest income (the difference between interest paid by customers and interest paid by banks) due to the increase in interest rates by the European Central Bank (ECB) to curb inflation.

Return on assets (ROA) also improved, standing at 1.28% (up 0.59 percentage points).

Although slight, the cost of credit risk increased by 0.16 percentage points to 0.45%, due to the strengthening of credit impairments by the banks.

In the note from the supervisor led by Mário Centeno, for banks as a whole, it is also stated that the cost-to-income ratio (dividing operating expenses by operating income to obtain the cost benefit) improved, falling 13.7% compared to 2022 and standing at 36.9%. The increase in operating income contributed to this, as did the improvement in net interest income.

According to the Bank of Portugal’s note, asset quality also improved. The non-performing loans (NPL) ratio fell 0.2 percentage points to 2.7%, an evolution that reflects not only “the reduction in NPLs” but also “the increase in productive (risk-free) loans”.

In this context, the gross NPL ratio for companies stood at 5% (down 0.8 percentage points), due to the reduction in NPL. In the private segment, the gross NPL ratio remained at 2.4%.

In terms of capital, both the total own funds ratio and the Common Equity Tier 1 (CET1) ratio increased by 0.7% to 19.6% and 17.1% respectively.

The average risk weight also improved, decreasing by 0.6% to 42.7%, due to the importance of the lower risk components in assets.

Original Story: Expresso | Author: Isabel Vicente | Data: 27.03.2024
Edition and translation: Prime Yield

Mainland Portugal has only 45 municipalities – less than a fifth – where half the families have the minimum income needed to buy a house on credit. According to data from the Ministry of Economy, the median income in Portugal (1,091 euros) is only enough for half of what is needed to pay the bank: 2,063 euros.

The analysis by the Strategy and Studies Office, quoted by the Jornal de Negócios, also pointed to the difficulties felt not only in the metropolitan areas of Lisbon and Porto, but also in the rest of the mainland.

Along with Lisbon, the Algarve region has seen its housing accessibility deteriorate, and is even the region with the lowest levels of accessibility. In the Central Alentejo, the Beiras and Serra da Estrela concentrate more than a third of the municipalities where most families are able to meet their mortgage instalments.

This housing affordability index compared, at a local level, the median income of families with the monthly effort required to cover a credit instalment plan.

The study concluded that in only 45 of the 278 mainland municipalities (16.18%) does the median income manage to cover the value of the instalments required for the houses – these are mainly concentrated in the interior, except for four municipalities in the Leiria region and two in the Coimbra region. Alentejo Central has the highest number of municipalities with affordability – 10 – with another seven in the Beiras and Serra da Estrela region.

Another reality is found in Vila do Bispo, in the Algarve, the municipality with the worst affordability and where half of the families don’t have enough income to cover even a third of the instalment that would be due on a loan.

Original Story: Executive Digest | Author: Press
Edition and translation: Prime Yield
Photo: Shutterstock

The Italians from DoValue are leaving the Portuguese bad debt market and have three investors looking to buy the management company, which has €500 million in assets under management.

In addition to LX Partners’ €4 billion deal, another operation is underway in the Portuguese distressed debt market. The Italian group DoValue, controlled by Fortress and Bain, has already selected the three candidates to submit binding offers for its non-performing loans(NPL)  and real estate management business in Portugal, which has €500 million in assets under management.

ECO understands that a shortlist of three candidates has already been selected, who will have to submit binding offers in the coming weeks. DoValue will then select the investor with whom it will enter into exclusive negotiations to reach a final agreement.

This follows a phase in which more than a dozen investors expressed interest in the transaction. According to DoValue Portugal, one of the reasons for the investors’ interest is related to the restructuring process that began a year ago “to transform the company into a boutique servicer, focusing on various strategic services for the regularisation and management of complex assets”. “In this context, we have acquired new clients, also with a strategic role, thus accumulating a wide and relevant experience for this specialisation,” the company said.

To date, DoValue Portugal’s activity has mainly involved the management of problematic assets, including a portfolio of real estate and NPL from Oitante (initially worth €1.5 billion, but now with a higher residual value) and a portfolio of NPL from Davidson Kempner. Although the final results for last year are not yet known, it had a turnover of €3.8 million by September. In 2022, it made a loss of almost €3 million after revenues of 7.1 million – compared to revenues of €21 million in 2019.

The Italians of DoValue entered the Portuguese market in 2019 with the acquisition of Altamira Portugal, which two years earlier had bought the business unit responsible for managing the real estate assets and credit portfolio of Oitante – the vehicle created to hold the assets of the former Banif that Santander didn’t want to buy. In 2021, Altamira Portugal was renamed DoValue Portugal.

Listed on the Milan stock exchange, DoValue claims to be the largest servicer in southern Europe. The group is controlled by Fortress and Bain, which own more than 40 per cent of the company.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield