NPL&REO News

Mergers and acquisitions in Portugal down 43% until March in a strong quarter for real estate

4 April, 2018

The market of mergers & acquisitions (M&A) lost momentum in Portugal during the 1st quarter of 2018, with y-o-y decreases of 19.1% and 43.3% in the number of transactions and in the negotiated amount, respectively.

According to the latest report from Transactional Track Record, released on April 4th, 3,1 billion euros were transacted in the M&A market during the first quarter of the year, reflecting a 43.3% y-o-y drop. There was also an 19.1% y-o-y downward in the number of transactions, which totalled 72 in Q1 2018 (89 in Q1 2017).

As the upward trend in real estate continued, the sector was the most active within this period with 15 transactions recorded, but, nevertheless, also representing an y-o-y 32% drop. Technology and internet were the areas that grew the most (133%), totalling 12 operations.

In the period under analysis, 31 inbound deals were recorded. Spain continued to be most active foreign buyer in number of deals, closing 10 operations for a total amount of € 156 million – 4 of which in the real estate sector, including the € 86 million investment from ORES Socimi into the acquisition of six retail assets in Portugal. France was also among the most active foreign buyers, with 7 transactions and investments amounting € 305 million, followed by Netherlands, with 2 deals that sum up € 450 million.

Looking into the total amount invested within the first three months, the top is headed by China with more than € 1.5 billion employed in the acquisition of Portuguese companies. «The deal of the quarter named by Transactional Track Record was the acquisition of Forum Montijo, Forum Sintra and Sintra Retail Park shopping centres by Immochan, in € 450 million investment», states the report.

Original Story: Jornal de Negócios
Photograph: Forum Montijo
Translation and Edition: Prime Yield

Banks plan to put €1 bn into the new NPL platform

23 March, 2018

Caixa Geral de Depósitos (CGD), BCP and Novo Banco, the three Portuguese banks that signed the memorandum to access the non-performing loans (NPLs) management platform, have already finished the list of processes to be transferred into this vehicle. The total of bad credit which will be jointly managed amounts to €1 billion.

The original story was released by economic newspaper “Jornal Económico”, wich quotes a source close to the process. According to the newspaper, the €1 bn are distributed almost «equally» between the three adherent banks.

This list comes a month after the banks had begun contacting their clients so that their non-performing loans can be jointly managed by the NPL management platform.

The memorandum to access the non-performing loans platform (“Plataforma de Gestão de Créditos Bancários”) was signed last September by CGD, BCP and Novo Banco. It aims to solve non-performing loans from these banks portfolio and shrink to a third the average period of recovery of these credits( to six months). But the platform works are, however, delayed. In September there was the expectation that by the end of the 1st quarter of 2018 the first results should be starting to be seen, but only now, after the conclusion of the credit lists to be manged by the platform, is that the work will start.

Original Story: Eco
Photograph: Depositphotos
Translation and Edition: Prime Yield

Portuguese NPL is still under the European Commission radar

2 March, 2018

For Valdis Dombrovckis, the European Comission (EU) Vice-President, the volumes of Non-Performing Loans (NPLs) in Portugal are a cause of concern. During an audition in the Portuguese National Assembly last Friday, the EU responsible showed his concern about the last data released by the European Central Bank which point to the NPL downsizing in Portugal still far from the European average. The NPL ratio in the Portuguese market fell from 17.9% in June 2016 to 15.5% in June 2017, in a correspondent decrease of about € 8 billion.

Speaking to the Portuguese Deputies, Dombrovckis warned that the Brussels sees «clear progress but the Portuguese NPL ratio is still well above the European average. That is why there is still work to be done in this area, given that the banking sector continues to be in risk».

According to the EU Commissioner, «during the last three years the NPL was reduced by 1/3 within the European Union, corresponding to about € 300 billion, and some of the countries that had high rates of NPL have substantially lowered that risk, making that the UE ratio stands now on the 4.4%».

Original Story: TSF Radio
Photograph: EPA/Stephanie Lecocq
Translation and Edition: Prime Yield

Bankinter Portugal has 400 assets from credit default

29 January, 2018

Bankinter Portugal real estate portfolio from non-performing loans (NPL) disclosure is made of 400 properties. Most of the assets are residential, having a value of 40 million euro, or 10% of the consolidated value.

The bank informed that its portfolio of mortgaged real estate assets had a “significant decrease” in the final stage of 2017, to a total gross value of 411,6 million euro (111,9 million less than one year ago), of which 44% correspond to residential assets. The foreclosure coverage is now 45,2%.

The NPL ratio of the Bank in Portugal is 7.5%, decreasing 1 percentage point compared to 2016. Now this indicator figures 392 million euros.

Original Story: Idealista
Photograph: Bankinter
Translation and Edition: Prime Yield

Portuguese Banks promise to reduce NPL ratio from 22% to 10% by 2021

19 January, 2018

Regulators believe that plans presented by the major national Banks are “ambitious but realistic”. For the moment, the implementation is in line with the planning, although the impact on tackling NPL is still to be assessed.

The six Portuguese banks most affected by bad debt issues – including CGD, BCP and Novo Banco – have committed with regulators to reduce by more than 10 percentage points (pp) their Non-Performing Loans (NPL) ratio. “These banks had an average NPL ratio of 22% as of December 2016, and estimate to bring it down to 10% by 2021″, as stated in the Troika’s post-programme report disclosed by the European Commission this Friday, 19th January, and which is focused on the mission that took place in Portugal between 29th November and 6th December.

NPL ratio is one of the main issues concerning the Portuguese Banks, as it requires higher provisions (thus affecting capital solidity) and also because it hinders the use of resources that could go to productive loans. Therefore, Banks had to submit NPL reduction plans to both national and European regulators, namely Banco de Portugal and European Central Bank. As stated in the reported, such measures include the sale of NPLs portfolios – which is already taking place – and also via repossessions and foreclosures. Strategically, Banks are mainly focusing in tackling the sale of NPL originated in non-financial corporations.

“The Banco de Portugal and the Single Supervisory Mechanism (led by the European Central Bank) see the plans as ambitious, but realistic, and so far the implementation is well underway,” the European Commission stresses in the report.

One of the strategies pursued in this area was the creation of a joint NPL management platform between CGD, BCP and Novo Banco, the banks with the highest NPL volume, which were also available to receive other competitors. The management of the platform, which is yet to be implemented, is integrated, in order to allow these institutions to work together when dealing with common debtors. Nevertheless, the credits will remain on the Banks’ balance sheet, leading Brussels to consider that this platform will not be a significant driver for changing this situation. Portuguese banking system has been reducing bad debt, reaching a total NPL stock of €40 billion as of September 2017, after a fall of €10,5 billion. However, since the total granted loans have also been declining, the NPL ratio failed to decrease significantly, sitting at 14.6% – but this is a figure that referrers to the entire Banking system and not only to the major Banks.

European Commission considers that each Bank’s individual plans for reduce NPL, the legal Framework concerning Corporate insolvency and recovery, as well as the monitoring of Supervising authorities could help to boost the reduction of NPL. But “is yet to early for assessing the efficiency of NPL’s reduction strategy. This could only be done when all the measures are in the implementation phase and begin to take effect”, concludes the report.

Original Story: Jornal de Negócios (Diogo Cavaleiro/Miguel Baltazar)
Translation and Edition: Prime Yield

Banking Union: First Progress Report on the tackling of non-performing loans to support the risk-reduction agenda

18 January, 2018

The European Commission has welcomed the headway made in tackling non-performing loans (NPLs) in the EU as part of ongoing work at the national and EU level to reduce remaining risks in parts of the European banking sector.

In its First Progress Report since the Finance Ministers agreed an Action Plan on reducing non-performing loans (NPLs), the Commission highlights the further improvement in NPL ratios and forthcoming measures to bring NPL stocks down further.

Reducing NPLs is important for the smooth functioning of the Banking Union and the Capital Markets Union, and for a stable and integrated financial system in the EU. Addressing high stocks of NPLs and preventing their possible future accumulation is essential to strengthen and cement economic growth in Europe. Households and companies depend on a strong and crisis-proof financial sector to get financing. While individual banks and Member States are in the driving seat when it comes to tackling their stocks of NPLs, there is a clear EU dimension given the potential spill-over effects to the EU economy as a whole.

Valdis Dombrovskis, Vice-President for Financial Stability, Financial Services and Capital Markets Union said: “Getting the level of NPLs down is essential to reducing risks in the banking sector and completing the Banking Union. Concerted efforts by banks, supervisors, Member States and Commission have already borne fruits. But we need to forge ahead to further bring down NPL levels. We want banks in all EU countries to regain their full capacity to lend to companies and households while preventing build-up of new bad loans.”

Key findings
Today’s First Progress Report, which takes the form of a Communication and an accompanying Staff Working Document, highlights recent developments of NPLs both in the EU as a whole and within individual Member States. It shows that the positive trend of falling NPL ratios and growing coverage ratios has solidified and continued into the second half of 2017.

NPL ratios have been falling in nearly all Member States, although the situation differs significantly across Member States. The overall NPL ratio in the EU declined to 4.6% (Q2 2017), down by roughly one percentage point year-on-year, and by a third since Q4 2014.

The data demonstrates that risk reduction is taking hold in the European banking system, and will support progress towards completing Banking Union, which should occur by risk reduction and risk sharing in parallel.

The report also shows that the EU is on track with implementing the Council’s Action Plan.

In spring, the Commission will propose a comprehensive package of measures to reduce the level of existing NPLs and to prevent the build-up of NPLs in the future. The package will focus on four areas: (i) supervisory actions, (ii) reform of restructuring, insolvency and debt recovery frameworks, (iii) development of secondary markets for distressed assets, and (iv) fostering restructuring of the banking system. Action in these areas should be at national level and at Union level where appropriate.

The Commission also calls on Member States and the European Parliament to rapidly agree on the Commission’s proposal on business insolvency. Proposed in November 2016, this measure would help companies in financial difficulty to restructure early on so as to prevent bankruptcy, leading to more efficient insolvency procedures in the EU.

Source: European Commission
Edition: Prime Yield

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