Portugal’s Novo Banco, the ‘good bank’ created out of extinct BES toxicity has failed to fly, or even hobble.

The bank has just presented its results for the nine-month until September and the figures were worse than the expected.

«Consolidated results have worsened in a substantial way», writes Diário de Notícias – outlining ‘an accumulated loss of €572.3 million to the end of September. That’s 46% more than losses for the same period last year.

The government «had expected to inject €600 million euros into the bank (via the Resolution Fund) in 2020, due to the losses the bank reported this year, DN adds – but «in the end Novo Banco’s financial situation is worse than it seemed. Again».

The European Commission «estimates that the State will be called to inject €653 million, minimum, next year because of failings to balance capital ratios. (Finance minister) Mário Centeno forecast €600 million», the paper explains.

Grupo Novo Banco hasn’t specified exactly how much money it will request from the Resolution Fund – which DN stresses «is the property of Portuguese banks but doesn’t have the resources necessary to keep injecting this level of funds, so has to borrow from the State».

The country will have to wait for the results of the last three months of 2019 before Novo Banco formulates its «request».

As was explained when the bank was ‘sold’ to US equity fund Lone Star in 2017, Portuguese taxpayers are tied to helping recapitalise the bank to the tune of a maximum of €3.89 billion euros.

The figure was always touted as «the worst case scenario». But fast-forwarding to 2019 shows the financial situation «just continues to worsen», says DN.

«Just to have an idea, since 2014 – the year of BES’ implosion – to September this year, Group Novo Banco has presented cumulative losses in the order of €6.55 billion».

Whatever happens in the future, says the paper, «the negative consequences for the public purse are already substantial».

Original Story: Portugal Resident | Natasha Donn
Photo: Site Novo Banco
Edition: Prime Yield

Rating agency Moody’s cut the Portuguese banking outlook to stable from positive, warning the domestic economy will continue to weaken as euro zone growth slows, capping current low levels of profitability.

After a severe debt and economic crisis, Portuguese banks returned to profitability last year with reported net income of €1.1 billion, compared with a net loss of €88 million in 2017, Moody’s said.

However, Moody’s said banks’ profitability in recent years has been «distorted by sizable losses reported at Novo Banco», which emerged from the ruins of Banco Espírito Santo after its collapse in 2014.

Novo Banco has been 75% owned by U.S. buyout firm Lone Star since October 2017 and 25% by the Portuguese Resolution Fund. If Novo Banco’s losses are excluded, Portuguese banks’ return on assets stood at a low level of 0.7% at the end of last year and 0.8% in the first six months of 2019.

Moody’s said Portuguese banks’ capital, profitability and funding conditions were expected to «hold steady over the next 12 to 18 months» and that they were likely to «further reduce their stock of non-performing assets».

But even though Portuguese banks’ non-performing assets will continue to «fall organically», their «stock of problematic assets» will remain high, Moody’s said.

«Profitability will likely remain close to current low levels, with lower provisioning expenses and cost reduction initiatives broadly offsetting subdued business volumes and very low interest rates,» said Moody’s senior analyst Maria Vinuela.

According to Moody’s, banks have improved their «loss absorption capacity» in recent years, but a large volume of deferred tax assets – those carrying losses from previous years that may be used to reduce later taxable income – undermines their capital strength.

Original Story: Euronews | Catarina Demony
Photo: FreeImages.com / Armindo Caetano
Edition: Prime Yield

Portuguese lender Millennium bcp reported a 5% rise in nine-month net, helped by record client numbers and a sharp drop in non-performing assets. 

Millennium reduced exposure to non-performing assets and loans, which have plagued Portuguese banks since the 2010-14 financial crisis, by 27% to €4.6 billion, with impairments and provisions for bad loans dropping 11.2% to €299 million.

Its performing credit portfolio rose by 4.5%, or €1.4 billion, with strong corporate lending accounting for almost half of the growth as the country’s economy continued to strengthen.

«Despite the challenging ECB monetary policy, the truth is these are the best nine-month results we’ve had in the past 12 years» CEO Miguel Maya told a news briefing, referring to pressure from record low interest rates set by the European Central Bank.

Net profit came in at €270 million as Portugal’s biggest listed bank lifted net interest income (NII) by 9.5% year on year to €1.15 billion.

«The increase in net interest income was the fruit of growing activity with our clients,» Maya said. «The evolution prospects are positive supported by a stronger client base and normalisation of the cost of risk.»

Maya added that client numbers, in Portugal and abroad, rose 5% to nearly 5.1 million, supported by new technology platforms for digital and mobile customers. Those customers now account for nearly 40% of the total client base.

Millennium also operates in Poland, Angola and Mozambique.

Original Story: Reuters | Sérgio Gonçalves 
Photo: Site Millennium bcp
Edition: Prime Yield

With property prices in «major urban centres» already showing clear signs of «overheating», the government is considering throttling back on the issuing of ‘Golden Visas’ for the purchase of houses and apartments.

Says Expresso, economy minister Pedro Siza Vieira has confirmed the executive will be «pondering new alterations of the golden visa rules to counter the excessive investment in property this programme has generated, contributing to further inflating the property market which is already overheated, particularly in large cities», like Lisbon and Porto.

Golden Visas for house and apartment purchases are unlikely to be ruled out altogether, however. One thought is that they will probably only be offered when investors are buying in the interior or areas of low population density, where the «pressure on property prices is less».

Expresso stresses that when the regime was first introduced, in 2012, Portugal’s property market was in the doldrums. The lure of fast-track residency visas has turned everything round, bringing €4.8 billion into the economy, and conceding entry into Europe to nationals from China (4,396), Brazil (829), Turkey (366), South Africa (314) and Russia (283).

But the programme has always been under-fire, for the fact that it essentially opens a door into Europe for anyone with money, with very little research taken into how they have come by it.

Says Expresso, likely changes to the Golden Visa regime could actually see the €500,000 stipulation for property purchases reduced, as long as the transactions satisfy other criteria.

This far however, this is all «on the drawing board». 

Original Story: Portugal Resident |Natasha Donn
Photo: FreeImages.com / Miguel Saavedra
Edition: Prime Yield

Portuguese BPI Bank, owned by the Spanish Caixa Bank, recorded €253.6 million profits in the first nine months of this year represents a decrease of 52% from the €529.1 million achieved in the same period of 2018.

In the presentation of the results, it can be read that «compared to the same period of 2018, the evolution of the consolidated profit (-52%) is strongly influenced by the extraordinary positive impacts registered in September 2018 (+€160 million, mainly gains on the sale of shareholdings) in the activity in Portugal which were not repeated in 2019».

BPI’s also ended the Q3 with 29 fewer workers and 14 fewer branches compared to the same period last year.However, the bank mentions that in September of this year it had «in Portugal 31 ‘premier’ centres, one mobile branch and 34 business centres, making a total of 479 commercial units». In September 2019, the BPI had 4,869 employees, while in September last year it had 4,898.

Original Story: Macau News Agency | Lusa
Photo: Facebook BPI
Edition: Prime Yield

Caixa Economica Montepio Geral, the bank holding company, has mandated JP Morgan to arrange its third public NPL securitization, with the Portuguese lender closing in on getting its non-performing exposures (NPE) below the 10% mark.

Gaia Finance ABS has a gross book value of €234.3 million and an unpaid principal balance of €206.6 million. The pool consists of defaulted secured and unsecured loans, with under half of the defaulted pool comprising secured loans backed by residential, commercial and industrial properties in Portugal.

Original Story: Global Capital |Tom Brown
Photo: Site CEMG
Edition: Prime Yield

Portugal’s banking system closed 2018 with earning totalling €1.3 billion, against losses of € 228 million in the year before, according to the European Banking Federation (EBF).

According to the data released by EFB, these results are «largely explained by the substantial reduction in impairments».

Last year there was also a significant decrease in the non-performing loans (NPL) ratio, with total NPLs to fell by €24.6 billion since the peak in June 2016. «Ambitious strategies have been implemented to reduce NPLs and remarkable progress has been achieved: the NPL ratio has decreased significantly after reaching its peak level in June 2016 (from 17.9% to 9.4%), while the NPL coverage ratio increased from 43.2% to 51.9%», says EFB.

Total outstanding loans decreased 0.6% year-on-year, which may be an indication that deleveraging is nearing its end. Considering the domestic activity, loans to non-financial corporations (NFCs) fell 4.8% to €69.6 billion. In 2018, loans to SMEs, which correspond to 80.2% of total corporate loans, decreased 5.6% year-on-year to €55.4 billion. Furthermore, SMEs’ overdue credit dropped significantly (down 35.7% year-on-year or €3.2 billion), with the corresponding ratio standing at 10.4% (versus 15.2% in 2017), mostly fuelled by the performance of micro companies. Loans to households rose by 0.5%, with loans for consumption increasing by 10.5% and loans for house purchase decreasing by 0.2%.

At the end of 2018, the Portuguese banking system comprised 150 institutions, 60 of which were banks (including 30 branches of foreign banks), 86 mutual agricultural credit banks and four savings banks. The number of bank employees stood at around 1% of the total active workforce, while the five largest banks accounted for 78% of total assets.

Original Story: EXPRESSO | Lusa
Photo: Svilen Milev from Free Images
Edition and Translation: Prime Yield

After a long-running investigation, Portugal’s competition authority AdC announced it fined 14 banks a total of € 225 million for concerted practices of exchanging sensitive commercial information on credit products.

The fines were imposed on Portugal’s biggest bank, CGD, as well as Millennium BCP, BBVA, BIC, BPI, BES, BANIF, Barclays, Caixa de Credito Agricola, Montepio, Santander, Deutsche Bank and UCI.

«AdC is not aware of similar convictions in other member states of the European Union and (it) is therefore an unprecedented condemnation,» it said.

In a statement, AdC said that for more than a decade, between 2002 and 2013, the banks exchanged sensitive information on the supply of retail banking credit products, including mortgages, consumer and corporate loans.

According to AdC, each bank knew in detail «the characteristics of the offer of other banks, which discouraged the target banks from offering better conditions to customers by eliminating competitive pressure».

AdC said the scheme had a significant impact on customers.

«By distorting the rules of competition through unlawful coordination that allowed them (banks) to reduce the risk and uncertainty about the performance of their direct competitors, the behaviour of the banks harmed competition, directly affecting consumers,» AdC said.

The fine imposed was based on the «severity and duration of the participation in the infringement by each bank», AdC added.

Original Story: Reuters | Author: Catarina Demony and Sérgio Gonçalves
Photo: Photo by Armindo Caetano from Free Images
Edition: Prime Yield

Portugal’s Novo Banco confirmed the sale of a non-performing loans (NPL) portfolio originally valued in €2,732 million to an international fund for €193 million. This operation represents a € 106 million loss-making in 2019 results but will have a positive impact in the bank’s capital, with its NPL ration shrinking from 20.7% to 15%.

In cause, a portfolio of NPL and related assets, including securities – real estate or shares -, among others, that were previously arranged in the so-called Nata II Project. The buyer is a society owned by the US asset management group David Kempner European Partners.

However, the dimension of the now sold portfolio ended to be smaller than the € 3 billion initially estimated, since there were excluded ten cases with a combined original value of € 309 million, for which the bank believes it can receive individual biddings with a more attractive value. The information was released by the bank in a note, where it explains that this is still the largest transaction of its kind to be completed in Portugal.

The loans now sold correspond to assets identified as high-risk and which losses could unleash further capital injections from the State. Among these assets, inherited from the extinct BES, there were credits borrowed by companies as the Ongoing or the construction group Moniz da Maia.

In a note, Novo Banco states that with such deal «another relevant step in the process of non-performing assets disposal was given, allowing the bank to accelerate its reduction».

The credits and assets sold had a nominal value of € 2,732 million and a gross book value of € 1,713 million. The difference among these figures is explained by the fact that the original values include liabilities, guarantees and writte-offs. The sale was closed by only €191 million, representing a discount of 89% from the assets’ book value, but of only 35% from the net value, meaning that the bank had already recognized significant impairment losses in these.

Original Story: Observador |  Author: Ana Suspiro 
Photo: Novo Banco site
Translation and Edition: Prime Yield

Portugal’s banks have around €4 billion in bad loans for sale, 75% of which from the extinct BES. In the country there are almost one hundred credit recovery companies, but only about a fifth is registered.

«To buy [non-performing credit] from CGD [Caixa Geral de Depósitos] is one thing, buying from Santander is other completely different», said to Renascença the executive director from APERC, the association that represents more than 90% of the recovered credit in the country.

The reason, he explains, «has to do with the credit’s risk analysis and its acceptance prospects». According to António Gaspar, «the acceptance of the credit risk analysis, for instance, is very much stricter in Santander than in CGD or of what it was in BES, now Novo Banco».

In practical terms, this means that, with a stricter risk analysis the probability of default is much smaller and the «existing defaults will be easily recovered than those having a larger net, on which everything fits in».

Original Story: Renascença | Author: Sandra Afonso 
Photo: Caixa Geral de Depósitos
Translation and Edition: Prime Yield

In Portugal, more than half of the firms do not have any bank relationship, reveals the country’s Central Bank (BdP).

According to an analysis taken by BdP’s team, when firms borrow from banks, they hold two bank relationships on average. The smaller firms rely on less banks than the larger ones. Large firms have on average six different bank relationships, while micro firms, that employ less than 10 employees, usually have only one bank relationship.

There is also evidence that when firms gain access to bank loans for the first time, they usually establish a single bank relationship. As time goes by and the firm expands its activity, the likelihood of establishing relationships with other banks increases.

Original Story: BdP | Author: Diana Bonfim and Sujiao Zhao 
Photo: FreeImages.com/ Matthew Bowden
Edition: Prime Yield

Portugal’s Novo Banco, controlled by U.S. private equity fund Lone Star, expects to halve its non-performing loan (NPL) ratio to 10% this year or next, putting it on a par with domestic rivals, its chairman told Reuters.

The bank, which emerged from the ruins of Banco Espirito Santo after its collapse in 2014, shed €3.7 billion of bad loans between the end of 2017 and March 2019, leaving it with €6.5 billion worth and reducing its bad loan ratio from 28% to 21.8%.

Chairman Byron Haynes said an additional halving of the ratio was key to the bank’s medium-term plans as Portugal’s third-largest lender by assets needed to align itself with local peers.

«Whether that’s going to be a 2019 or 2020 event, let’s see…we need to continue to take advantage of the good market conditions that exist at this point in time,» he said.

The average NPL ratio in Portugal’s banking sector remains high compared to the euro zone average of around 4.5%.

Novo Banco, 75% owned by Lone Star since October 2017 and 25% by the Portuguese Resolution Fund, has been offloading bad loans, real estate and non-core assets under restructuring commitments agreed with Brussels.

It is currently selling a portfolio of large debtors’ NPLs with a gross book value of more than €3 billion and a real estate portfolio valued at up to 500 million.

«The level of interest has been very high…and we expect these transactions to materialise in the near future,» Haynes said, adding that he also expected the insurance market regulator to approve the €190 million sale of GNB Vida to Bankers Insurance Holdings in the third quarter.

Novo Banco posted a €93 million first-quarter loss due to its balance sheet clean-up efforts but recurring profit rose more than 3% to €85 million with the net interest income jumping 33%.

«The recurrent business is where the growth will come,» Haynes said. «The other one is about how quickly can we de-risk the balance sheet and clean up the legacy issues.»

Original Story: Reuters | Sérgio Gonçalves |
Photo: Novo Banco site
Edition: Prime Yield

Greece is one the largest debtors within the Portuguese banking system. The south European country is the so-called “client 112” from the recently published Banco de Portugal  Largest Debtors’ list, and had driven  BCP and BPI banks to report losses of €766 million, after one of the biggest debt write-offs in history granted in the aftermath of the country’s second financial bailout in 2012.

Last 16^thJuly, the Bank of Portugal published the list of the major debtors to the Portuguese banks, which have asked for State support to solve their financial problems. The Central Bank did not reveal names, but it did, however, reveal numbers and the losses they provoked. Nonetheless, it was possible to reveal some identities by crossing the available data.

That was the case of the “client 112”, which was ironically the cause for BPI and BCP requesting state assistance of €1.5 billion and €3 billion, respectively.

According to the information released, client 112 caused a loss of €408 million to BPI, corresponding to 80% of the bank’s total losses. The Bank of Portugal revealed that BPI’s exposure to 112 was initially even higher (€ 480 million). But BPI was not the only one as BCP lost €358 million with Greece’s public debt, corresponding to 30% of the bank’s total losses at the time.

Original Story:Eco
Photo: Banco de Portugal
Edition: Prime Yield

Portuguese bank Caixa Económica Montepio Geral (“Montepio”) has just announced the sale completion of a non-performing loan (NPL) portfolio with a gross value of €321 million to Panorama Jubilante.

In a nota sent to CMVM, the Portuguese Securities Commission, the bank informs «that on 12 July 2019, and following a competitive sale process, a public deed was signed for the sale of a non-performing loans’ portfolio, in the form of a direct sale, to Panorama Jubilante S.A., a company incorporated under the Portuguese laws and established in Portugal».

According to the bank, the gross amount sold was 321 million euros, in a portfolio that included approximately 13.000 loans.

«The completion of this operation materializes Banco Montepio’s strategy for the continuous reduction of non-performing assets», says the bank in the same document.

Original Story: RTP
Photo: Banco Montepio site
Translation & Edition:Prime Yield

Following its goals for cleansing up the NPA (Non-Performing Assets) from its balance sheets, the Portuguese bank Novo Banco has just closed the sale of a further REO (Real Estate Owned) portfolio with a gross value of €400 million. The investment fund Cerberus together with Finsolutia are the new owners.

Named “Sertorius Project”, the portfolio includes almost 200 assets, of which two thirds are non-identified lands, besides the industrial, residential and commercial properties correspondent to the other third. Most of the assets are located either in Lisbon or Setubal areas.

The bank led by António Ramalho keeps following a strict strategy of non-rentable assets’ reduction by alienating non-performing loans (NPL) and real estate portfolios as a result of the European regulators’ requirements. Over the next months, Novo Banco expects to close a deal on “Nata 2 Project”, which is a €3 Bilion NPL portfolio and the biggest ever sold in Portugal, as ECO confirmed in exclusive.

Regarding Nata 2, Bain, KKR Davidson Kempner moved on to the second phase of the tender, which is the binding offer. Bloomberg wrote that Bain would be the best-placed contender, right in front of Davidson Kempner.

Both operations need to be approved by the Resolution Fund as they must respond for the losses related to portfolio alienation. This year, the fund led by Máximo dos Santos was called to inject more 1,145M€ under the clause of contingent capital mechanism in the 2017 contract with the American Lone Star for 75% of the bank.

Original Story: Eco News
Photo: Novo Banco site
Edition:Prime Yield

Servicer Whitestar will be in charge of the management of the two non-performing loan (NPL) portfolios recently sold by Montepio Bank, totalling a gross value of €400 million.

As explained by Jornal Económico, Whitestar is a participant in both the joint-ventures that won the two recent tenders for the sale of NPL portfolios launched by the bank led by Carlos Tavares and Dulce Mota.

AXA Investment Managers was the winner of the tender launched for the sale of the “Brick” REO (Real Estate Owned) portfolio, comprising almost 1.000 properties with a gross nominal value of €100 million. Whitestar joined AXA in this operation as its Asset Management Service Provider.

Besides, the society 400 Capital Management, having Arrow/ Whitestar as servicer, won the portfolio “Atlas 2”, which had a gross nominal value of 300 million euros and almost 6.000 contracts, including secured and unsecured credit.

Original Story: Jornal Económico | Maria Teixeira Alves
Photo: Banco Montepio site
Translation & Edition:Prime Yield

Even though having sold more than €5.7 billion in non-performing loans (NPL) and other toxic assets over last year, the six largest banks operating in Portugal still have another €25.8 billion to be cleansed from their balance sheets in order to fulfil regulatory demands.

Despite having followed different strategies on reducing its NPL pile stock, Portugal, Spain and Italy are being successful in cleaning up these toxic assets from their financial system, and they seem to be well positioned to continue their NPL reduction, Moodys says.

Notwithstanding the undergoing efforts, Moody’s Senior VP Maria Cabanyes said she hopes that banks keep pursuing their goal of converging with EU average, despite the three above mentioned countries still register high NPL ratios.

In Portugal, the banking sector has been pursuing a strategy that consists of selling their toxic assets. Altogether, in 2018 the country’s six largest banks sold more than €5.7 Bn in NPL and toxic assets, driving a significant decline within the country’s NPL ratio to 11% in the end of the year.

Despite considerable progress, there are still 25.8Bn€ to be cleansed. The banks in Portugal are still urged to tackle their NPL ratio, which stands at 9.4% above the limit imposed by the European Banking Authority.

Original story: ECO |  Eco News 
Photo: Free Images.com/Ricardo Gurgel
Edition & Translation:Prime Yield

Portuguese banking group Caixa de Crédito Agrícola ended the first quarter of 2019 with a consolidated net result of € 43.5 million, recording a 18% y-o-y growth.

From these, € 36.6 million were generated by the banking business, while the other € 4.2 million came from the insurance business. The real estate investment vehicles, however, hit the results negatively in € -5.3 million, partly because of the participation units depreciation.

Bank deposits reached €14 billion, 10.2% more (equivalent to € 1,297 million) than in the first quarter of 2018. The gross credit portfolio reached €10 billion, recording a y-o-y growth of 6.2%.  As for the Non-Performing Loans (NPL) ratio there was a downward compared to the 13.7% recorded in the end of March 2018, standing now at 9.8%.

«The group has continued its sound and prudent management, reflected in accumulated credit impairments of € 465 million as March 2019, a figure that assures a NPL coverage ratio of 45.3%», adds Crédito Agrícola, in a statement.

Original Story: Expresso | Maria João Bourbon
Photo: Site Crédito Agrícola
Edition & Translation:Prime Yield