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

After LX Partners, it’s now the Italians at DoValue who are preparing to exit the Portuguese distressed debt market by selling the management company, which has €500 million in assets under management.

More investors are leaving the distressed debt market in Portugal. After LX Partners, whose €4 billion deal will be further developed at the end of the month, it is now the Italian group DoValue, controlled by Fortress and Bain, which is moving ahead with the sale of its non-performing loans (NPL) and property manager in Portugal, with €500 million in assets under management and around 60 employees, according to information gathered by ECO.

The process of selling DoValue Portugal, which the company confirmed to ECO is underway, is being managed by PWC Spain, according to the same sources.

According to DoValue Portugal, “the sale process is progressing positively and already has the interest of more than a dozen potential buyers”.

One of the reasons for the high level of interest, according to the company, has to do with the restructuring, that began in the first quarter of 2023, to “transform the company into a boutique servicer, focused on various strategic services for the regularisation and management of complex assets”. “In this context, we have been attracting new clients, also with a strategic role, thus accumulating a broad and relevant experience for this specialisation,” DoValue Portugal told ECO.

DoValue Portugal’s business has declined in recent years, with sales falling from €21 million in 2019 to 7.1 million in 2022, according to the InformaDB company database. It closed 2022 with losses of almost €3 million. Until September this year, sales totalled €3.8 million, the company told ECO.

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

At the time, Altamira also took over the management of a batch of Oitante’s real estate assets and NPL  totalling €1.5 billion, a portfolio that now has a higher residual value.

In addition to the agreement with Oitante, DoValue Portugal also manages a portfolio of non-performing loans for Davidson Kempner.

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. Both funds have other investments in Portugal. For example, Fortress is preparing to acquire a €230 million NPL  portfolio from Banco Montepio, ECO announced at the end of last year.

Edition and translation: Prime Yield
Source: ECO | Alberto Teixeira
Photo: Shutterstock Photo

DBRS talks of a prolonged period of inflation and high mortgage rates that could put pressure on the system, especially given the vast majority of variable rate mortgages in the Portuguese economy.

DBRS Morningstar classifies the Collateral Performance Outlook for 2024 (the real guarantees attached to defaulted loans) in Portugal as “Stable”. The 2024 Credit Rating Outlook is also classified as “Stable”.

Similarly, the Portuguese Non-Performing Loans (NPL) securitisations rated by DBRS performed well, with all the notes rated by the agency (relating to four operations) having been repaid in full.

DBRS points to potential risks in future transactions. These include the slowdown in residential property prices in Portugal following the rise in interest rates. Property prices still increased by 8.7% in the 2nd quarter of 2023 compared to the previous year, compared to 13.2%  in the 2nd quarter of 2022, it points out.

DBRS speaks of a prolonged period of inflation and high mortgage rates that could put the system under pressure, especially given the vast majority of variable rate mortgages in the Portuguese economy.

Vulnerabilities are becoming visible, with new measures introduced in September 2023 to support households facing greater financial pressure, says DBRS.

“As emphasised in our commentary on foreclosures and bankruptcies, longer legal deadlines and the backlog of foreclosure and bankruptcy proceedings could affect performance and place increased importance on the manager’s ability to achieve out-of-court solutions,” the analysis reads.

Regarding the European NPL securitisation market, DBRS says that “in terms of credit performance, the situation last year leaned more towards the negative, but still without any obvious general trend”.

“Most of the well-performing transactions, such as Irish, Portuguese, more recently Italian and UK, have continued to deleverage, with a healthy level of loan recoveries and note repayments; however, older Italian and Spanish NPL securitisations continue to struggle to reverse their past performance,” says DBRS in its European NPLs 2024 Outlook.

The European NPL market slowed down significantly in 2023, says DBRS, which adds that none of the transactions suspended after the European Central Bank began raising interest rates resumed during the year.

“With the exception of some concentrated issuance in the final weeks of the year, activity in this asset class was the quietest since issuance resumed in 2016 following the Great Financial Crisis,” says DBRS.

The analysis focuses on Asset-backed Commercial Paper, Residential Mortgage-Backed Security, and Auto.

NPL securitisations outside government asset protection programmes, seen in jurisdictions such as Cyprus, Ireland, Portugal, Spain and the UK, depend on European securitisation market conditions. Here DBRS Morningstar expects “public issuance of senior notes during 2024 to be broadly in line with what we saw during the post-pandemic, pre-Ukraine invasion period (2021-2022) at 200 to 400 million euros per year, given that interest rates are now stabilising”.

As in 2023, the year could also see securitisations of smaller NPL portfolios, re-performing loan portfolios (which have returned to performing status after ceasing to be so) that can be sold from existing securitisations and other more esoteric mixed asset class transactions involving NPL and loans with a low probability of repayment.

For 2024, the rating agency expects the rating outlook to remain stable in all jurisdictions covered by the analysis, “with stable credit outlooks for most of them”.

“We maintain our negative credit outlook for Spain and Italy – the two jurisdictions where we have seen difficulties in some of the transactions assessed over the past few years, including in the face of prospects for delayed recovery and, in some cases, a downwardly revised total recovery amount.”

“An important factor to consider for the European NPL space in 2024 will be the recent renewal of Greece’s Hellenic Asset Protection Scheme (HAPS), which was approved on 4 December 2023 with a total guaranteed amount of €2bn of securitised bonds and a new expiry date of 31 December 2024 (unless extended by subsequent decree). We believe that many of the Greek banks – both systemic (Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank) and other non-systemic banks – will take advantage of this renewal and securitise some or all of their NPL stocks before the guarantee expires,” says DBRS.

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

The Bank of Portugal has told Millennium bcp, Novo Banco, Banco BPI and the local unit of Spain’s Santander, to create a new capital buffer equivalent to 4% of their loan portfolios that are collateralised by home mortgages.

It said in a statement the measure addressing “sectoral systemic risk” would come into effect on Oct. 1, 2024, and be reviewed at least every two years.

“This instrument has a preventative nature and aims to increase the resilience of institutions in the face of a potential future materialisation of systemic risk in the residential real estate market in Portugal,” it said.

The central bank said the four banks, which account for 61% of total home loans, were using internal ratings-based approach to calculate risk-weighted assets, which leads to lower evaluations than those of banks using the standard method.

BPI is owned by Spain’s Caixabank and Novo Banco by the U.S. fund Lone Star.

According to central bank data, all lenders in Portugal brought total non-performing loans (NPLs) down to €9.69 billion, or 3.1% of total credit, in June from the peak of 17.9% in June 2016.

The NPL ratio of loans to individuals was just 2.4% in June, despite rising interest rates and high inflation.

Original Story: Reuters |Staff
Photo: Bank of Portugal headquarters
Edition: Prime Yield

The sale is part of the bank’s normalisation plan, which had profits of €650.7 million by September.

BCP has put a new portfolio of problematic assets on the market with a book value of €80 million, according to Eco.

The “Grace project” includes around €64 million in guaranteed non-performing loans (NPL) and €15 million euros in real estate assets (REO), according to sources contacted by the newspaper.

The sale is part of the bank’s normalisation plan, which had profits of €651 million by September.

The aim is to cleanse the balance sheet of problematic assets. The digital newspaper explains that in September BCP had €790 million in NPL and a further €1.23 billion in non-performing assets (NPE), a reduction of almost €400 million year-on-year, partly due to the sale of the ECS funds at the end of 2022, a portfolio of luxury hotels and other properties.

The NPE ratio fell from 3.7% to 3%, and the chairman, Miguel Maya, ruled out any problem with a systemic dimension in a context of rising interest rates.

Original Story: Jornal de Negócios |Negócios 
Photo: Millennium bcp website
Edition and translation: Prime Yield

The International Monetary Fund (IMF) is advising Portuguese banks to avoid ploughing all of their rising profits into dividends, instead calling for a strengthening of capital reserves as a “cushion” against a possible rise in bad debts and bankruptcies.

“Banks need to be capitalised, including Portuguese banks, and we suggest that in the current phase banks increase their own funds and capital reserves and refrain, as far as possible, from paying out all of the increase in profits in dividends,” said the IMF’s European director, Alfred Kammer, at a meeting with European journalists in Brussels.

At a time when banks such as BCP, Novobanco, Santander Totta and BPI have almost doubled their profits in the first nine months of the year compared to the same period last year, the IMF’s regional director warns that “times are going to get tougher” and that “additional buffers” are needed.

“As a result of the post-pandemic adjustment, we’re going to see an increase in bankruptcies, we’re going to see an increase in non-performing loans, and that’s all over Europe, it’s not a specific problem for Portugal,” he adds.

According to Alfred Kammer, this is a “normal” situation given the tight monetary policy with high interest rates, now stabilised by the European Central Bank, which is making access to finance more difficult and causing families and companies to pay more for their loans, especially housing loans.

“These upside risks are normal, […] but we also advise the Portuguese authorities to increase their systemic capital reserves to prepare for an increase in non-performing loans and bankruptcies,” he adds.

He warns that “as financial conditions tighten, financial tensions may emerge”, so “countries should closely monitor banks’ credit quality, leverage and liquidity risks, and increase capital reserves”.

The Regional Economic Outlook for Europe states that “although the European banking system has high levels of solvency and liquidity, banks in some countries hold substantial securities that could lead to a significant depletion of their own funds”.

This is the case in Portugal, which has one of the highest levels of variable-rate mortgages in Europe.

Nevertheless, Alfred Kammer is optimistic about the Portuguese economy, noting that “Portugal has had strong growth, reflecting the recovery in tourism” and also “efforts” to combat unemployment and invest in education.

“I think this is also reflected in our positive forecast for Portugal,” he adds, alluding to the fact that Portugal’s figures are better than those of the eurozone.

“Portugal has been very determined in the last three years to create buffers […] and that is certainly reflected in the positive assessment for Portugal and that makes us generally optimistic for growth in Portugal in the medium term, but of course in the short term it is suffering at the same time a slowdown in Europe […] and that is also reflected in our figures,” says Alfred Kammer.

The IMF expects the Portuguese economy to grow by 2.3 per cent this year and 1.5 per cent in 2024, with inflation falling to 5.3 per cent in 2023 and 3.4 per cent in 2024.

Original Story: CNN Portugal | Lusa /AM
Photo: IMF – Facebook
Translation and edition: Prime Yield

LX Partners has put €4.2 billion euros of non-performing loans (NPL) and the servicer Algebra up for sale. It’s the deal of the year in Portugal and there are five interested parties.

The NPL of the year in Portugal has attracted five bidders, according to information obtained by ECO from two market sources.

The consortium formed by Cerberus/Intrum/FS, Balbec, Carval, LCM and Bain has submitted non-binding proposals for the purchase of the €4.2 billion of problematic loans and the Algebra platform, which is also part of the deal.

LX Partners has put its entire NPL business in Portugal up for sale in a process codenamed “Projeto Cascais” and led by KPMG.

At stake are NPL that the fund has purchased from Portuguese banks in recent years. Out of a gross value of €4.2 billion, approximately €4 bilion are unsecured loans and another €200 million are secured loans. The deal also includes the servicer responsible for managing this portfolio, Algebra Capital.

LX Partners is an investor focused on distressed debt and NPLs, private equity and real estate. In Portugal, in addition to the NPL business, it owns Five Credit (a digital platform for alternative loans for SMEs), the management company Circle Capital and invested €125 million in Smart Studios (studios for students) in 2018.

The “Cascais Project” can be considered the biggest of this year, which has been marked by a strong cooling of the market. The few portfolios that have entered the market this year are small in value, rarely exceeding €100 million. One of the largest cases is that of Banco Montepio, which has a portfolio of distressed assets valued at around €230 million, including, among other things, ongoing debt and cash in court.

The main reason for this cooling is the “big clean-up” that the banks have carried out in recent years. Five years ago, the banking system was faced with €31.8 billion of NPLs, equivalent to 13.6% of total loans. By the end of June, the ratio had fallen to 3.1%, below the “magic number” of 5%, totalling €9.7 billion, according to the latest data from the Bank of Portugal. Net of write-downs, NPLs totalled €4.2 billion.

Original story: ECO |Alberto Teixeira
Photo: Hugo Humberto Plácido da Silva on FreeImages
Edition and translation: Prime Yield

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

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

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