The Bank of Spain is monitoring around €8.2 billion in pandemic-era loan guarantees issued by the state-owned Instituto de Crédito Oficial (ICO), considering them at high risk of default, El Mundo reported.

According to the central bank’s latest Financial Stability Report (May 2025), roughly 9% of ICO-backed COVID loans are now classified as “doubtful,” meaning they may never be repaid. Another 8% remain under “special monitoring,” where credit risk has significantly increased.

The ICO program, launched in 2020 with up to €140 billion in state guarantees to support businesses, ultimately backed about €92 billion in loans. Defaults have already cost public finances €2.1 billion as of the end of 2024, and potential future losses could lift that figure beyond €8.6 billion.

Some of these losses may be offset by fees banks paid for the guarantees—estimated at around €2 billion—but the Bank of Spain warns the total cost could still exceed earlier projections by the fiscal watchdog AIReF, which in 2021 expected around €6 billion in bad loans.

Despite a decline in loans under special monitoring last year, the number of doubtful loans rose by 7.5%, prompting the Bank of Spain to continue close supervision of pandemic-related credit exposure.

Foto de J Shim na Unsplash

Original Story: El Mundo | Author: Alejandra Olces
Edition and translation: Prime Yield

The Catalan bank accelerates sale of non-performing loans and mortgages as part of its strategy to improve asset quality, says El Confidencial.

Banco Sabadell has recently completed the sale of approximately €435 million in loans, according to sources cited by Bloomberg. Spain’s fourth-largest bank is currently advancing a project known as “Project Medusa,” which involves the disposal of €260 million in unsecured loans.

These transactions are part of Sabadell’s broader strategy to clean up its balance sheet. The bank has ramped up its divestment of troubled assets as BBVA continues its takeover attempt, which saw a revised offer last week — a roughly 10% increase — in a final effort to close the deal after more than a year of negotiations.

BBVA is now proposing one ordinary BBVA share for every 4.8376 Sabadell shares, valuing the Catalan lender at around €17.1 billion — about a 2% premium over Sabadell’s market value as of last Friday.

A notable transaction within this clean-up includes the sale of €100 million in non-performing mortgages to Axactor ASA. Four additional smaller portfolios, each worth approximately €20 million, were acquired by firms such as Balbec Capital and Hipoges, the latter backed by KKR.

Original Story: El Confidencial
Edition and translation: Prime Yield

Indotek Group, the Budapest–headquartered European real estate investment and asset management company, has acquired a diversified portfolio of 524 residential and commercial properties in Spain. The portfolio was acquired in a structured transaction comprising NPLs and real estate asset

The acquisition marks a strategic step in Indotek Group’s Iberian expansion and builds on over a decade of experience in European NPL and distressed asset transactions, targeting high–potential assets across multiple sectors.

Daniel Jellinek, CEO of Indotek Group, commented: “The acquisition is an important step in our strategic expansion in Western Europe and complements our existing portfolio in Spain. It also adds to Indotek Group’s successful track record in executing complex NPL and distressed asset deals with international partners and offers the opportunity to apply our value creation approach to underperforming portfolios.”

The acquired portfolio has a current market value of approximately EUR 43.5 million, with over 90% comprising residential assets, including 307 apartments and 89 houses, complemented by ancillary units such as parking spaces, outbuildings, and select commercial properties.

The portfolio is geographically diversified across Catalonia / Cataluña (40%), the Community of Madrid / Comunidad de Madrid (18%), the Community of Valencia / Comunidad Valenciana (15%), and Andalusia / Andalucía (11%).

Michael Reinmuth, Head of Transactions for Spain and Portugal at Indotek Group, said: “The transaction expands our Iberian presence beyond hotels and shopping centers, adding scale in residential and NPL assets with clear value–creation potential.”

Indotek is cooperating with Redwood, a local partner recently acquired by BCM Global, in evaluating, pricing, and clearing the portfolio and is actively exploring further NPL and distressed asset opportunities in Spain. In parallel, the Group is assessing new pipeline deals across Portugal, Italy, and selected Central European markets, aiming to leverage its established cross-border asset management and servicing capabilities.

“This deal marks a milestone in our international NPL strategy. After 18 months of preparation, it puts us on the Spanish NPL map with a transaction of significant scale and complexity,” added Anna Vavrinecz, Director of NPL Investments at Indotek Group.

Indotek Group is an established player in the Spanish real estate market, with a portfolio valued over EUR 230 million spanning hospitality, retail, and now residential and mixed-use assets. Its holdings include retail properties such as Espacio León shopping center in Castilla y León (acquired from Blackstone in 2024), Vilamarina in Barcelona, and Pueblo Bonaire Factory Outlet in Valencia. Its hospitality portfolio comprises seven seaside hotels with more than 1,680 rooms.

The transaction reflects Indotek’s European investment strategy, focused on revitalizing underperforming assets, diversifying cash flow, and pursuing value-add opportunities across its 12-country footprint.

The transaction was advised by DLA Piper (legal) and KPMG Madrid (financial) for Indotek Group. Alantra acted as the sell-side advisor, supported by Dentons London and Cuatrecasas Madrid as legal counsel.

Original Story: PR Newswire| Author: Indotek Group
Edition: Prime Yield
Image: Indotek Group

Spanish institutions have removed bad loans from their balance sheets, and sales are expected to increase in the coming months.

Spanish banks have reduced their non-performing loan (NPL) ratio below 3% for the first time since October 2008. According to financial sources, the European Central Bank (ECB) is pressuring institutions to remain below this threshold, which has driven an increase in the sale of portfolios of doubtful or failed loans (non-performing loans, or NPLs). As of June, Spanish banks reported an NPL ratio of 2.89%, according to data from the Bank of Spain—the lowest level since October 2008. To achieve this, they made a final sprint during the quarter, selling off portfolios and reducing the total volume of doubtful loans to €33.703 billion—€788 million less than in May, and €1.849 billion less than in March.

Although delinquency has long ceased to be a major concern for analysts and investors, the regulator remains closely focused and wants banks to take advantage of the current economic boom to minimize the volume of doubtful loans on their balance sheets. The most direct approach is selling portfolios to opportunistic funds, typically at a discount to the gross value of the loans. In these cases, banks draw from existing provisions or allocate new ones, recognizing losses but improving their balance sheets.

“In the first half of 2025, Spain’s NPL buy/sell market maintained a similar level of activity compared to the same period last year, dominated by unsecured portfolios and growth in the REO (Real Estate Owned) and PL/RPL (performing and reperforming loans, especially secured) segments. The increase in PL/RPL transactions indicates a growing appetite for lower-risk assets with higher recovery potential, likely tied to economic improvement and falling delinquency rates. Based on information from leading financial advisors—who are aware of projects launching after September—we expect a similar level of market activity in the second half of 2025,” explains Augusto Piñel, partner at Gómez-Acebo & Pombo.

Among the banks making strong efforts to reduce NPLs is Banco Santander, which ended June with a ratio of 2.91%, down from 2.99% in March and 3.05% in December. Sabadell also improved, dropping from 3.21% a year ago to 2.47%. Excluding TSB—which it sold to Santander (with the deal expected to close in 2025)—the figure fell from 3.8% to 2.81%. Unicaja improved from 2.9% to 2.2% over the year, a level similar to Bankinter’s 2.14%. BBVA lags behind, with a 2.9% ratio compared to 3% in December.

The rate at which new non-performing loans are appearing is slower than in the past, allowing banks to focus on removing existing doubtful loans from their balance sheets. Moreover, they are increasingly selling newer loans, gradually phasing out older ones—thereby reducing the discounts at which portfolios are sold. Additionally, more portfolios are being sold that contain loans not in default but that have experienced some payment issues (so-called reperforming loans, or RPLs). In the coming months, banks expect to continue this portfolio-selling strategy. In fact, several specialist advisors believe the trend will accelerate.

José Antonio Olavarrieta, partner at Deloitte, notes there is increasing activity with more transactions: “We expect a certain continuity in the types of portfolios being sold compared to the first half of the year, though with a higher number of deals, especially in the RPL and NPL segments (mainly unsecured and mortgage-backed),” he adds.

Greater Transparency

Ángel Pérez López, partner at Uría, highlights that Spain is still pending approval of the Draft Law on Credit Purchasers and Servicers. The country is delayed in transposing a European directive aimed at facilitating NPL sales and increasing transparency in the process. Brussels has already threatened to impose a fine.

“The regulation will be very important for the sale and management of NPLs. Once approved, this law—based on a directive from December 2021 and introduced in Spain with a draft bill in May 2024—will bring much greater certainty to the Spanish NPL market,” says Pérez López, who also notes more activity in RPLs than in NPLs. “Despite the decline in bank NPL ratios, Spain remains a relevant market, which has led to more selective strategies. Still, strong interest in high-yield assets suggests specialized investors remain active. Reperforming portfolios have shown steady momentum, with a slight uptick in interest due to their more controlled risk profile.”

The transposition of Directive 2021/2167/EU—which harmonizes the regulatory framework and strengthens protections—is expected to create a safer and more flexible market, driving increased institutional interest, summarizes Paloma Moreno de la Santa, team director at Baker McKenzie

Original story: El Confidencial | Author: Oscar Gimenez
Edition and translation: Prime Yield

The volume of doubtful loans at Spain’s financial credit institutions (ECFs) dropped to €2.404 billion in June, reaching its lowest level since May 2008, according to the latest data released by the Bank of Spain.

These institutions specialize in specific credit areas such as consumer loans, mortgages, credit cards, guarantees, leasing, and factoring, but unlike traditional banks, they are not permitted to accept deposits.

Most Spanish banks operate their own financial arms to support consumer credit, while other companies—including major supermarket chains and vehicle manufacturers—also run financing entities to offer credit to customers purchasing their products or services.

In June, the stock of doubtful loans held by these financial institutions decreased by €166 million compared to May, and by nearly €2.9 billion year-on-year. This brought their non-performing loan (NPL) ratio down to 5.42%, the lowest since December 2019, before the COVID-19 pandemic, down from 6.03% the previous month and 6.43% a year earlier.

This improvement was supported by an increase of €1.73 billion in new loans granted, pushing the total loan portfolio to €44.3 billion in June, although still €527 million lower than in June 2024.

While ECFs typically have higher delinquency rates than deposit-taking banks, their overall credit volume remains significantly smaller. For comparison, traditional deposit banks reported an NPL ratio of 2.89%, with a loan portfolio totalling €1.13 trillion.

Original Story: Europa Press
Edition and translation: Prime Yield

The non-performing loan (NPL) ratio of Spanish banks fell below 3% in June for the first time since October 2008, according to historical data published by the Bank of Spain.

Furthermore, the NPL rate in June decreased compared to 3.11% in May and 3.43% in the same month of 2024.

In terms of loan volume, the stock of doubtful loans amounted to €36.291 billion, representing a reduction of €955 million compared to May and €4.599 billion compared to June 2024. This also marked the lowest amount of non-performing loans since June 2008.

The decline in the NPL ratio is also explained by an increase in the total volume of credit granted, which reached €1.220 trillion in June. This implies a rise of €23.113 billion compared to May and €27.848 billion compared to June 2024.

On the other hand, data broken down by type of institution show that the doubtful loan ratio for all deposit-taking institutions (banks, savings banks, and cooperatives) ended June at 2.89%, two basis points lower than in the previous month and 43 basis points lower than in the same period of 2024.

In absolute terms, these institutions recorded a decrease of €788 million in their doubtful loan portfolio, down to €33.703 billion. Compared to June 2024, this figure is about €4.129 billion lower.

Meanwhile, credit financial institutions saw their delinquency rate fall to 5.42%, 61 basis points lower than in May, although the year-on-year reduction is one percentage point.

Additionally, the volume of doubtful loans for these institutions stood at €2.404 billion at the end of June, €166 million less on a monthly basis. Compared to the same month last year, the doubtful balance decreased by about €479 million.

Finally, according to the Bank of Spain, total credit institutions’ provisions stood at €27.654 billion, a reduction of €330 million compared to May, while the year-on-year change showed a decrease of €1.598 billion.

Original Story: Europa Press
Edition and translation: Prime Yield

The deal, which could be closed for between 100 and 150 million, would be a cut compared to the 200 million asked for two years ago.

KKR is moving forward in the process of divesting Hipoges, its subsidiary specialising in the management of real estate assets in Spain. As reported by Bloomberg, the US fund is in exclusive negotiations with Pollen Street Capital, a British investment firm that also controls the servicer Finsolutia.

The sale process, which was reactivated at the end of 2023 with the mandate granted to Alantra, has entered its final phase. Although KKR’s initial objective was to reach a valuation of around 150 million euros, sources quoted by ElConfidencial suggest that the deal could finally close at around 100 million. In any case, both figures would represent a downward adjustment compared to the 200 million requested in a previous sale attempt that did not materialise.

After that failed attempt, Hipoges explored the possibility of acquiring Servihabitat – Lone Star’s real estate subsidiary -, an operation which also failed to come to fruition.

Hipoges’ situation has been conditioned by the recent transfer of assets from Sareb to Entidad Estatal de Suelo (Sepes), with the aim of allocating them to affordable rentals. This government decision directly affects the servicer, which in 2021 was awarded the management of a portfolio valued at €25 billion from the so-called ‘bad bank’.

In addition to Pollen Street, other firms such as doValue (owner of Altamira), J.C. Flowers (through Pepper Advantage) and Arrow Global Group (through Amitra Capital) have also shown interest in the transaction.

With a portfolio of more than €50 billion under management, Hipoges remains one of the leading real estate and financial asset servicing platforms in Spain.

Original Story: Iberian Property | Author: Alexandre
Edition: Prime Yield

The Bank of Spain has warned investors in the real estate market that the risk of default in the sector has increased.

This Monday, the Bank of Spain issued a statement warning of an increase in the risk of loan default by non-financial companies, largely driven by the construction and real estate sectors, as well as other services.

‘There has been a slight increase in the probability of loan defaults in recent quarters,’ the bank said in its biannual report on the financial situation of households and businesses. The report states that the probability of defaulting on bank debt has risen by 39 basis points since the third quarter of 2023, increasing from 2.14% to 2.5%. However, this figure remains 25 basis points below the 2022 average.

Of these 39 basis points, 31 rose in the fourth quarter of last year, while the remaining eight points rose in the first half of 2025. This trend was observed across companies of all sizes.

Nevertheless, the deterioration in credit quality was somewhat more pronounced among large companies, with a 51-basis-point increase in the probability of default from the third quarter of 2024 to reach 2.03%. This figure is approximately 50 basis points below the average for non-financial companies overall, according to Europa Press.

What has happened?

The recent increase in the probability of corporate default has mainly been driven by growth in the construction and real estate sectors, as well as other services. In fact, the average risk of default in these sectors has increased by 44 and 96 basis points respectively since the third quarter of 2024.

Conversely, credit risk has risen slightly in the trade and hospitality sectors, reaching nine and twelve basis points above the third-quarter 2024 probability of default in the first quarter of 2025.

Nevertheless, the Bank of Spain has warned that the data ‘do not indicate a significant increase in tail risk, as the proportion of credit classified in the highest risk category has remained at levels similar to those in 2022’.

Regarding the increase in risk in the construction and real estate sectors, the agency explained that the deterioration is due to ‘an increase in the risk associated with the credit balance, assuming a constant debt structure and borrower composition’.

Original Story: El Economista
Edition and transalation: Prime Yield

Photo: Jorge Fernández Salas at Unsplash

The volume of non-performing loans (NPL) fell to 37.926 billion, which is 10% less than a year earlier.

According to provisional data published by the Bank of Spain, the Spanish banking sector’s NPL ratio continued to fall in the fourth month of the year, reaching 3.18% — its lowest level since October 2008, when it stood at 2.92%.

This was also a decrease compared to March, when the default rate was 3.21%, and April 2024, when NPL accounted for 3.60% of the credit stock.

The volume of doubtful loans fell to €37.926 billion in April, which is €354 million less than in March and €4.22 billion less than in April 2024.

This decline in NPL is accompanied by an increase in the total amount of loans granted in Spain. During April, the total stock of loans granted was €1.193 trillion, representing an increase of around €2 billion compared to March, and around €22 billion compared to April 2024.

Breaking the data down by type of institution, the NPL ratio for all deposit institutions (banks, savings banks, and cooperatives) was 3.08% in April, which is three basis points lower than the previous month and almost 40 basis points lower than in the same period in 2024.

In absolute terms, this type of institution recorded a €351 million decrease in its NPL portfolio, bringing it to €35.201 billion. Compared to April 2024, this is about €3.702 billion lower.

Meanwhile, credit institutions saw their NPL ratio rise to 5.99%, an increase of 20 basis points compared to March, though the year-on-year reduction remains at over one percentage point.

The volume of NPL for this type of institution was €2.538 billion at the end of April, which is €15 million less than the previous month. Compared to the same month last year, the non-performing balance fell by around €527 million.

Finally, according to data from the Bank of Spain, provisions for all credit institutions totalled €28.548 billion in March, which was a decrease of €37 million compared to the previous month. The year-on-year variation showed a reduction of €1.49 billion.

Original Story: Diário Publico | Author: Europa Press
Edition and translation: Prime Yield

AltamarCAM Partners, through its management company Altamar Private Equity SGIIC, has officially launched and registered with the CNMV its new fund of funds for secondary investments: ACP Secondaries 6 FCR, with a target total committed capital of €1.3 billion. This vehicle is part of the global ACP S6 programme, which will also include parallel vehicles and complementary structures managed or advised by the group.

According to data from Lazard, the global volume of transactions in the secondary market reached $150 billion in 2024 and could reach $200 billion in the next two years. The launch of the new fund comes a few months after Altamar announced, last February, the closing of ACP Secondaries 5, after reaching €1.6 billion in committed capital. The firm is currently among the top 20 secondary fund managers worldwide, in a market dominated by Ardian. Altamar already manages more than €20 billion in assets and has set itself the goal of doubling that figure within five years.

ACP Secondaries 6 is designed to invest predominantly in secondary transactions in private equity funds, selecting mainly international underlying funds — buyouts, growth and venture capital — as well as complementary private assets, including infrastructure and distressed debt.

The fund’s investment strategy is based on three pillars: secondary transactions, co-investments and primary (on and opportunistic basis). Regarding the secondary transactions, the vast majority of investments will be made in the secondary market for private equity fund interests, where Altamar has extensive experience. As for co-investments: up to 20% may be allocated to direct co-investments with other funds or strategic partners. Last, a limited and selective exposure to primary transactions is envisaged.

In terms of geographical scope, ACP Secondaries 6 will take a global approach, with a primary focus on Western Europe, the United States and emerging markets, without setting minimum or maximum limits per region.

The fund may invest up to 100% in other venture capital entities in accordance with Law 22/2014 (LECR) or equivalent foreign entities, while also retaining the possibility of co-investing directly in target companies alongside such entities.

ACP Secondaries 6 also contemplates the creation of parallel vehicles to adapt to the regulatory, tax or structural requirements of different types of investors. All investments will be made under substantially equivalent conditions between the main fund and its associated vehicles.

This new strategy reinforces AltamarCAM’s position as one of the key players in the European secondary fund investment market, combining access to quality opportunities with a focus on global diversification and risk control.

Original Story: Capital Riesgo
Edition and translation: Prime Yield

The combination of interest rates being stuck at zero per cent for years and a credit crunch at some point in the cycle created the ideal conditions for financing and investment outside the banking sector to flourish. In fact, the expansion of the non-banking financial sector has far outpaced the growth of the banking business over the last decade in both Spain and Europe. This has not gone unnoticed by regulators, as the phenomenon poses clear challenges to financial stability.

In Spain, this activity already accounts for 33.8% of the financial system’s total assets, although this figure remains far below the 59.9% represented by the non-banking financial sector in the euro area. According to data from the Bank of Spain, at the end of 2024 the total unconsolidated assets of banks and the non-banking financial sector in the domestic market amounted to €3.09 trillion and €1.58 trillion respectively.

In the euro area as a whole, these figures were €38.56 trillion and €57.49 trillion for the banking and non-banking sectors, respectively. However, what is particularly significant about this phenomenon is the pace at which it is advancing. While total assets managed by banks in Spain grew by almost 10% between 2015 and 2024, those channelled through the non-banking sector increased by around 25% — more than double.

According to the latest Financial Stability Report published by the Bank of Spain, the increase was 30% and 40% respectively over the last decade in the eurozone.

The term ‘non-banking’ encompasses ‘shadow banking’, which is not subject to the strict requirements imposed on financial institutions, as well as a long list of regulated and supervised operators, including insurance companies, pension funds, money market and non-money market funds, credit institutions, securitisation funds, and securities companies and agencies. This also covers the activities of venture capital companies, SOCIMIs, payment institutions, appraisers, and instrumental subsidiaries that issue securities.

In its latest annual report for 2024, the ECB acknowledges that the non-banking sector (IFNB) maintained its resilience to market volatility and supported market financing across all credit risk categories in the euro area. However, the report also notes that ‘vulnerabilities related to exposure concentration, liquidity mismatches, and high leverage in certain areas of the investment fund sector continue to be a cause for concern’.

Among the risks it monitors are sharp changes in valuations, which could lead to sudden fund outflows and margin calls, amplifying adverse market dynamics and causing spillover effects to other parts of the financial system.

According to the Financial Times, EU regulators are planning the first stress test to identify vulnerabilities in the non-bank financial system in the event of a worsening market crisis. This would include private equity firms, hedge funds, money market funds, insurers and pension funds, following a similar exercise carried out by the Bank of England last year.

The aim is to examine how a crisis would spread among the different parts of the financial system, and whether it could magnify the impact rather than absorb it.

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

Banco Santander has completed a new hotel financing deal. The bank has awarded Bank of America a portfolio consisting of eight loans to Spanish hotel establishments with a gross value close to €90 million. These loans were previously affected by collection issues or refinancing within the last year, but are now up to date with payments (a type of asset known as ‘reperforming’ in the jargon).

Other investors, such as Cerberus, Golden Tree and Ben Capital, were interested in the portfolio, dubbed Project Cosmos. These large, unique transactions are priced better than portfolios comprising thousands of borrowers, which typically make up mortgage, consumer credit or corporate and SME portfolios, because investors can perform a more detailed analysis of each borrower.

This transaction is similar to last year’s Zeta portfolio, which was a loan portfolio to the hotel sector with a gross nominal value of almost €300 million. According to El Confidencial, JP Morgan acquired this portfolio for around €200 million. The portfolio comprised financing for six hotel clients, with guarantees on 30 hotels.

Unique loans

The sale of unique and individual loans has become increasingly popular in bank debt divestments as a means of alleviating balance sheet provisions, following the major clean-up that took place in the past with the sale of large portfolios of non-performing assets worth billions of dollars.

Overall, banks have adopted this approach to asset disposal to keep default rates under control and transfer the management of these assets to specialists. Banco Santander is one of the most active banks in this area. In recent months, it has finalised transactions such as the Rock portfolio, which involved the acquisition of 90 million euros of secured financing by the KKR fund, and the transfer of 250 million euros of real estate and debt to Fortress and Balbec.

In just over a year, the group has sold portfolios of all kinds, totalling more than 3.2 billion in gross nominal value. At the end of March, its default ratio stood at 2.99%, down from 3.10% a year ago, with provisions covering 65.7% of doubtful financing. The balance of impaired assets stood at €34.992 billion and it had an insolvency fund network worth €22.98 billion.

According to the latest data published at the end of 2024, it also had a portfolio of foreclosed assets amounting to €4.823 billion, down from €5.506 billion the previous year. This figure is reduced to €2.131 billion when the €2.692 billion accumulated in provisions to cover the impairment of their value is deducted.

17.8 billion market

According to Axis Corporate data, the portfolio sales market closed transactions last year for a gross nominal value of €17.86 billion, although only €6.7 billion was for new asset disposals by financial institutions, with the remainder corresponding to transactions between investors despite the assets’ banking origin. One of the largest transactions was carried out by Sareb, with a nominal value of €1.5 billion.

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

According to the Bank of Spain’s Spring 2025 Stability Report, credit institutions (EFCs) slightly reduced their market share in 2024 compared to 2023, despite the expansion of consumer credit.

In 2024, the share of consumer credit provided by these institutions and banks combined was 20.1%, which is half a percentage point lower than in 2023.

The Bank of Spain notes that this decline contrasts with the general upward trend of the last decade, occurring amid an expansion of consumer credit across the entire system. It highlights that these loans grew by 7.3% in the banking sector in 2024, but by only 4.4% in finance companies.

‘This difference in growth between the two groups in 2024 is partly due to some banks absorbing the consumer credit activity previously provided by financial credit institutions that consolidated with them,’ the report notes. A similar effect occurred in 2020, a year impacted by the Covid-19 crisis.

Using data from 2025, the Bank of Spain reports that the downward trend in the share of finance companies continued during the first quarter, standing at 19.2%.

Evolution of non-performing loans

The Bank of Spain also addresses the credit quality of this segment. It notes that the ratio of non-performing loans for finance companies rose slightly to 3.5% in 2024, an increase of 0.1 percentage points. However, this remained below the ratio of 4.3% for banks in the same product segment.

The ratio of consumer loans from financial institutions under special surveillance fell by one percentage point last year, standing at 6.2%, while for banks as a whole it stood at 7.3%.

Finally, in the first quarter of 2025, there was a slight deterioration in credit quality, with increases in the ratios of doubtful loans (up 0.4 points to 3.9%) and special surveillance loans (up 0.5 points to 6.7%) in this credit segment.

Original Story: Valencia Plaza
Edition: Prime Yield
Image by Roman Ivanyshyn from Pixabay

The Bank of Spain has just warned that lenders’ income growth was likely to slow down this year amid lower interest rates and geopolitical risks, and it would need to closely monitor the credit quality of bank loans.

In its latestt semiannual financial stability report, the central bank said the credit quality was now at favourable levels, but it could deteriorate if a potential economic slowdown weighs on borrowers.

The ratio of bad loans has been stable in Spain a little above 3% in late 2024 and early 2025, far below the all time-high of 13.6% in December 2013.

Banks’ net interest income has fallen 3.9% in the first quarter, the central bank said, after rising 22% in 2023 and 8.8% in 2024.

It also said the much-delayed implementation of the Basel III international capital rules remained a priority as it would prevent accumulation of global systemic risks. The rules should be consistent with the planned revision of the European Union’s supervisory framework, it said, to make the framework simpler without undermining the banks’ resilience.

Original Story: Reuters | Author: Jesús Aguado
Edition: Prime Yield
Image by Gundula Vogel from Pixabay

The volume of non-performing loans (NPL) fell to 3.2% in March, the lowest level since November 2008 and four tenths lower than in March 2024.

Spanish bank defaults hit a new low. The volume of NPL stood at 3.21% at the end of March, which is the lowest level since November 2008. At that time, it rose above 3% as a result of the effects of the Lehman Brothers bankruptcy. This marks two consecutive months of decline, following a slight upturn in January when the figure stood at 3.33%. Compared to the same period in 2024, there has been a fall of four tenths of a percentage point, down from 3.61%, according to data from the Bank of Spain (BdE) published on Monday.

This translates into a reduction of over €4 billion to €38.28 billion. This decline is occurring despite an increase in the loan portfolio from €1.151 trilion to €1.159 trilion. However, it should be noted that the default rate for banks, savings banks, and credit cooperatives fell slightly from 3.21% to 3.12%, representing a decrease of €773 million, while the rate for credit institutions remained unchanged.

Specifically, this figure also slowed down, ending March at 5.79%, despite the portfolio increasing from €2.492 billion to €2.553 billion. This is a significant change compared to twelve months ago, when the figure was close to 7%, with 3.04 billion. It should be noted that consumer credit is experiencing a record period of double-digit growth at the start of the year.

In mid-February, the European Commission referred Spain to the Court of Justice of the European Union (CJEU) for failing to transpose the directive on non-performing loans into Spanish law. The directive aims to promote the development of a functioning secondary market for non-performing loans, as well as establishing rules for authorising and supervising loan purchasers and administrators. To this end, harmonised criteria are needed to enable administrators to trade across borders.

The government has acknowledged the reprimand and is stepping up efforts to bring the legislation before the Congress of Deputies as soon as possible. According to La Información, the government has asked the Council of State, its highest advisory body, to expedite the mandatory report so that the text can be presented to the lower house promptly. The executive must gather preliminary reports for this process, which delays its implementation.

Original Story: La información Económica | Author: Carmen Muñoz | Edition and translation: Prime Yield

The non-performing loans (NPL) ratio is back to its lowest level since November 2008. It is now at a level similar to that at the end of 1980, when the BdE’s historical series began.

The NPL ratio of Spanish banks stood at 3.30% at the end of February, slightly below the 3.33% recorded in January, according to preliminary data published by the Bank of Spain.

This brings the NPL ratio back to its lowest level since November 2008, when it stood at 3.21%, after rising to 3.33% in January. It is also 30 basis points lower than the ratio recorded in February 2024, when it stood at 3.62%. The current level is similar to that recorded at the end of 1980, when the Financial Supervisory Authority’s historical series began.

In terms of the volume of NPL, they fell by 364 million euros in February to 38,995 million euros, while the year-on-year reduction was 3,258 million euros.

Moreover, the reduction in the NPL ratio was also supported by an increase in the loan portfolio: at the end of February the stock stood at 1,183 billion euros, an increase of some 1,560 million euros compared with January. On the other hand, compared with February 2024, the volume of bank loans had increased by some 16.6 billion euro.

The data broken down by type of institution show that the ratio of doubtful assets of all deposit-taking institutions (banks, savings banks and cooperative societies) ended February at 3.21%, four basis points lower than in the previous month and 29 basis points lower than in the same period of 2024.

In absolute terms, this type of institution recorded a decrease of 343 million euro in its doubtful assets portfolio to 36,325 million euro. Compared with February 2024, the figure is around 2,922 million lower.

The NPL ratio of credit institutions increased slightly to 5.86%, two basis points more than in January. On a year-on-year basis, it fell by 73 basis points.

The volume of doubtful loans of this type of institution at the end of February was 2,492 million euro, eight million less than the monthly variation, while the doubtful balance was reduced by 328 million euro compared to the same month of the previous year.

Finally, according to the Bank of Spain, provisions for all credit institutions amounted to 28,828 million, 128 million less than in January, while the year-on-year variation showed a reduction of 1,203 million.

Original Story: Idealista News | Author: Europa Press / Ana P.Alarcos
Edition and translation: Prime Yield

Cajamar continues to clean up its non-performing assets. The bank has transferred a new portfolio of foreclosed assets, mainly residential, to the KKR fund. The assets, included in the so-called Eros II project and sold to the fund, have a gross value of 14.2 million euros.

In recent months, the company has also placed the Atenea II portfolio with specialists Goriz Advisor and Gannet. With a volume of 17.5 million euros, the latter portfolio consisted of 200 NPLs (non-performing loans) secured by mortgages.

These are very small operations compared to those transferred in recent years, but they continue to improve the quality of the balance sheet and place the management of non-performing assets in the hands of specialists.

The institution ended the year with 1,318.8 million in non-performing assets, having reduced its exposure to foreclosed assets by 31.5% (527.81 million) and its exposure to non-performing loans to 1.93%, one of the lowest in the sector. Its exposure to doubtful loans fell to 791.05 million and it maintains provisions covering 72% of these risks.

Like the rest of the banking sector, the bank frequently resorts to the sale of non-performing assets. Recent transactions include the transfer to Balbec Capital of 136 million in healthy and non-performing loans in the Utrecht project.

Cajamar has also concluded transactions with Waterfall Asset Management, involving the sale of doubtful unsecured loans; with LC ASSET 1, Lindorff, Bain Capital, Link Financial and GCBE Advanced Solutions (formerly Gescobro), among others.

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

KKR & Co. Inc. is in advanced talks to sell its Spanish real estate management company Hipo to Pollen Street Group Ltd., according to people with knowledge of the matter.

The discussions are ongoing and KKR could still decide not to pursue the deal or select another people added, asking not to be named discussing private information.

Original Story: Bloomberg | Author: Jorge Zuloaga
Edition: Prime Yield

Last year, Spanish banks sold portfolios of toxic assets for a total value of €6.7 billion, including a portfolio of €1.5 billion from Sareb, according to a compilation by Axis Corporate (Accenture).

If we add the transactions that took place in the secondary market between the private equity firms themselves, the amount rises to €17.86 billion, a volume similar to that of 2023, but half the historical record of 2018. At the same time, Ana Botín suddenly transferred all of Popular’s real estate risk (€30 billion) to Blackstone.

Santander was the most active bank last year, with seven transactions of toxic asset portfolios for a total of €1.8 billion. CaixaBank is next in the ranking, having transferred batches of non-performing loans and real estate for a total of €973 million.

Sabadell follows with €938 million.

Sareb, the vehicle in which the toxic assets of the nine savings banks bailed out during the financial crisis are parked, transferred 1.5 billion in unpaid loans to Axactor in one fell swoop.

According to Accenture, this year will see an acceleration in the sale of real estate risk assets by Sareb, as its legal dissolution is imminent. This is scheduled for 2027, although the government has the power to extend the deadline.

The size of portfolios changing hands has fallen sharply in recent years. The size of 78% of portfolios is less than €500 million.

Going forward, Accenture predicts that most buyout activity will focus on unsecured and refinanced loans.

€73.5 billion of NPL to be unwound

The clean-up of Spanish banks’ real estate assets is well underway after almost twenty years. But there are still €73.5 billion worth of toxic assets to be unwound.

Santander is the bank with the largest real estate holdings on its balance sheet: €36 billion. It is followed by BBVA with €15.327 billion. And CaixaBank with 10.352 billion.

Unicaja made a clean sweep last year and its stock of toxic assets fell by 14%. Its risk volume (€1.348 billion) is similar to that of Bankinter, which did not lend to property developers in the years before the property bubble.

The private equity firms Cerberus, Blackstone, Lone Star and Axactor are the ones that have fattened their portfolios with toxic assets from Spanish banks over the last decade.

Between the four of them, they have acquired €97.35 billion of real estate risk owned by the banks or bought back from other private equity firms. This is half of the €207.52 billion that have changed hands, according to Axis Corporate data.

The real estate legacy still to be liquidated is now reduced and so well provisioned that portfolio sales no longer cause losses in the income statement.

Original Story: Expansión | Author: R.Lander
Edition and translation: Prime Yield

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

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

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

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

Movements in the sector

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

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

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

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