NPL&REO News

Bank of Spain asks Banks to monitor state-backed loans

Spanish banks must carefully monitor the performance of state-backed loans granted during the COVID-19 pandemic to identify risks and any potential rise in bad debts, the central bank’s deputy governor said.

Last year, the government approved up to 100 billion euros in so-called ICO liquidity lines, where Spain guaranteed up to 80% of the loans that were channelled through banks to small and mid-sized companies and the self-employed.

“The evolution of these portfolios will have to be monitored over the coming months … because the few remaining waivers … have expired and also because of the performance of ICO-backed exposures,” Bank of Spain deputy governor Margarita Delgado told a financial event.

Delgado said assets under special surveillance, or considered subject to heightened credit risk, had increased in recent quarters but were still at a “relatively low level”, including in the hard-hit areas such as tourism.

The deputy governor urged lenders to continue strengthening their capital buffers and not ease up on provisions to cope with a potential rise in bad loans.

“There should be no rush to reverse last year’s provisions until there is full confidence that the loan portfolio is performing as expected,” she said.

So far, bad loans have not risen in Spain due to guarantees and moratoriums but could climb once those protections are withdrawn, analysts say.

In July, non-performing loans at Spanish banks stood at 4.39%, its lowest level since March 2009.

Several Spanish banks have merged to cope with the effects from ultra-low interest rates and a potential rise in bad loans.

Delgado said there appeared to be more limited scope for mergers after a wave of consolidation that has number of Spanish lenders to 10 from 55 before the financial crisis in 2008.

Original Story: Reuters | Jesús Aguado, Emma Pinedo 
Photo: Bank of Spain website
Edition
: Prime Yield

Spain’s NPL rate at its lowest in 12 years

The nonperforming loan (NPL) rate of Spanish banks stood at 4.34% in July, its lowest figure in twelve years, since March 2009.

According to the latest data from the Bank of Spain, the outstanding loan portfolio at the end of July reached 1.220 billion euros, compared with 1.232 billion euros the previous month.

The balance of NPL also fell from 54.218 to 53.644 million, which also contributed to the decline in the indicator.

Since July 2020, when it stood at 4.72%, the NPL ratio has fallen by three tenths of a percentage point.

So far this year, bank NPLs have ranged from 4.55% in February and May to a low in July.

In addition to the total data for the sector, the Bank of Spain publishes each month the aggregate default rate of banks, savings banks and cooperatives (cajas rurales), on the one hand, and, on the other, that corresponding to financial credit institutions (EFCs), which finance the purchase of large consumer goods.

The combined NPL ratio of banks, savings banks and cooperatives also reached an annual low of 4.33%, down from 4.34% in June.

The loan portfolio stood at 1.1172 billion euros, with a volume of doubtful loans of 50.793 million euros, down from 51.356 million euros in June.

In the case of financial credit institutions (FCIs), which specialise in financing large consumer goods, the NPL ratio was also the lowest of the year at 6.50%, with a volume of non-performing loans of 26.250 million euros, down from 26.320 million euros in June, for a loan portfolio of 40.362 million euros.

Original Story: Agencia EFE | Madrid 
Photo: Photo by Victor Iglesias in FreeImages.com
Edition: Prime Yield

Intrum buys a €1bn portfolio from Cerberus and removes it from secondary market

Intrum has completed one of the largest deals since the pandemic began, acquiring a portfolio of 100,000 unsecured loans worth 1.000 million euros from Cerberus and shaking up the secondary market.

The portfolio consists of 100,000 unsecured loans, mainly consumer loans, although there is also a part of corporate finance. These loans are part of some of the portfolios previously acquired from banks by Cerberus and managed by Gescobro.

Named Project Segura, the operation has been advised by Alantra and involves a significant movement in the secondary market. That is to say, instead of buying directly from the bank or institution where the defaults have occurred, it has been carried out between collection managers. 

Even before covid, the debt collection industry expected an upturn in secondary market transactions, something that did not happen due to the paralysis of the sector as a result of the pandemic. The operation, according to market sources, shows that movements in the sector are being reactivated. Unsecured loan portfolios are usually sold at discounts of more than 80%, although in the secondary market the discount is greater.

In fact, several operations are already underway. Banco Santander has put up for sale a portfolio of 600 million euros in non-performing loans (NPL) to SMEs, a project called Titán, which is being advised by Alantra, as reported by El Confidencial. The Cantabrian bank has already sold two portfolios of NPL at the beginning of the summer, for a nominal value of 800 million euros.

Waiting for more defaults

Expectations of defaults due to the effects of the crisis anticipate a boom in impaired credit portfolios, especially in consumer and corporate lending. However, the economy is still supported by cheap financing, both by the stimuli of the European Central Bank (ECB) and by public guarantees through the Official Credit Institute (ICO), and also by temporary lay-offs (ERTE). The moratoriums have also prevented an initial wave of defaults, although banks such as BBVA and Sabadell have already recorded increases in refinancing, which are usually the prelude to defaults. 

As a result, default forecasts have improved in the financial sector, and it is unclear when the expected upturn in defaults will arrive and on what scale. 

As shown by the purchase of Intrum, more movement is expected in the secondary market. In other words, entities will sell large portfolios of unrecovered loans through their servicers, given the different appetite and strategies in the recovery management sector. With this acquisition from Cerberus, Intrum approaches 53.000 million euro under management in Spain, where 2,000 of its 10,000 global employees are based. 

Original Story: El Confidencial | Óscar Giménez
Photo: Intrum website
Edition & Translation: Prime Yield

KKR, Tilden Park and Waterfall compete for CaixaBank’s bad credit

CaixaBank put for sale the Project MoMa, a portfolio of 5,700 problematic loans with a nominal value of 576 million euros. KKR, Tilden Park and Waterfall are the finalists of the bidding process launched by the bank.

Being advised by KPMG in the sales process, CaixaBank expects to close the deal before the end of the year.

The Project MoMa comprises 5,700 loans from 3,700 creditors who initially requested 576 million euros. The unpaid amount stands at 495 million and the portfolio is secured by 4,500 properties located mainly in Madrid, Barcelona and Seville. These properties are valued at 775 million, above the value of the loans.

The three finalists are the most active firms in this business after the outbreak of the pandemic. KKR manages all types of non-performing loans and real estate for third parties from the Hipoges platform. Tilden Park, for its part, last year closed the purchase of loans from Banco Sabadell. Finally, Waterfall, founded by former CaixaBank executives, bought mortgage loans from the Catalan bank at the end of 2019. The operation covers some higher quality assets – properties worth more than one million euros – in locations such as Mallorca, Boadilla del Monte, Pozuelo de Alarcón, the Costa Brava, Xàtiva and Barcelona.

Original Story: EJE Prime | News 
Photo: Caixa Bank website
Translation & Edition: Prime Yield

Spanish banks NPL rate at its lowest since 2009

Spanish banks’ non-performing loan (NPL) rate have retreated to its lowest since 2009.

According to the latest statistical series published by the Bank of Spain, in June the NPL from NFCs and households in the sheets of the Spanish banking institutions fell to 4.4%, compared with 4.55% in May, when it had risen slightly.

In fact, this 4.4% ratio is the lowest level recorded since March 2009, when it stood at 4.26%. It then began to climb month after month, reaching an all-time high of 13.62% in December 2013. 

Doubtful loans also fell by 1.76% to 54,218 million euros, the lowest volume in recent years.

Moreover, according to provisional data from the Bank of Spain, the volume of total credit increased by 1.6% in June to 1.232 trillion euros, after a slowdown in loans granted in the previous two months.

Original StoryCinco Dias | News
Photo: Photo by Victor Iglesias from FreeImages
Edition & Translation: Prime Yield

Servihabitat to manage €1.2 billion portfolio from Kutxabank

Servihabitat, the subsidiary of Lone Star (80%) and Caixa Bank (20%), won the contract to manage Kutxabank’s real estate asset portfolio, valued at €1.2 billion.

The bank’s portfolio is made up of 10,000 assets in Spain, concentrated in Andalusia and the Basque Country. Of this, 50% is residential and commercial, and the other half is land.

Iheb Nafaa, CEO of Servihabitat, explained: “Our commitment is to become a servicer with the guarantee of offering a quality service with a differential value that sets us apart from many other competitors. As a multi-client servicer with exclusive management capacity for our clients, and with nationwide territorial capillarity, we have been strategically reinforcing our structure to continue to be a benchmark in the sector.”

Neinor has held the contract until May 2022 for seven years but was eliminated in the process at the beginning of July. From that month, Servihabitat will take over for the next five years.

In 2020, Servihabitat closed 12.2 % more deals than in 2019. By 2021, it has focused its strategic plan on the management of land, mobilising land markets that will enable it to expand the supply of housing.

Original Story: El Confidencial|Ruth Ugalde
Photo: Photo by Philipp K for FreeImages
Edition: Prime Yield 

Santander puts for sale its credit exposure in Hesperia

Santander is negotiating the sale of its credit exposure on the Hesperia hotel group, a 136 million euros loan portfolio, with with several opportunistic funds, such as Apollo, Bain Capital and Bybrook.

According to the Spanish journal El Confidencial, the bank has already received offers for this loan portfolio, which includes eleven of the group’s hotels and offices as collateral.  Led by Santander itself, the transaction is not expected to be heavily discounted, as the loans are up to date with payments. 

The sale represents Santander’s exit from Hesperia’s credit pool. One of the largest hotel groups in the country, in 2014 the company controlled by the Galician Castro Sousa family had to sell assets to meet bank requirements to refinance debt, at a time when the bank was already Hesperia’s main financier. 

At the present, Hesperia is awaiting approval from the State Industrial Ownership Corporation (Sepi) for a 55 million euros aid package to deal with the effects left by Covid-19, which has the tourism and hotel sector as one of the main victims. Specifically, last March the group joined other hotel companies that applied for aid from the Solvency Support Fund for Strategic Companies managed by the Sepi with European resources.

Hesperia has a portfolio of 28 hotels in Spain with a total of 4,500 rooms, as well as four establishments in Venezuela. The group’s expansion plans for 2021 have so far focused on Latin America and the United States. In 2019, Hesperia posted revenue of 137 million euros, in line with the previous year, and made a profit of 15.5 million euros, up from 22 million euros in 2018. 

In recent months, transactions have been carried out on hotels operated by Hesperia on a leaseback basis. In July, the Grifols family, through the company Scranton, acquired the Hesperia Presidente hotel in Barcelona, located on Avenida Diagonal, for 125 million euros (including CAPEX). Likewise, in March 2020, the fund manager Meridia acquired the Hesperia Barcelona del Mar hotel, located on Calle Espronceda in the Catalan capital.

Original Story: Eje Prime | News
Photo: Facebook Santander
Edition & Translation: Prime Yield 

Blackstone opens up Aliseda to third parties for land management

The real estate platform is seeking partnerships with developers by offering the structure of the US fund to landowners.

Blackstone is looking to sell the land it has in stock. For that, the US fund will ally with developers through the opening of its servicer Aliseda, which manages a 800 million euros portfolio of land, according to El Confidencial.

The aim is to open up the servicer to third parties through the transfer of the land, taking advantage of its infrastructure to ally with developers. 

The company claims that Blackstone’s infrastructure allows it to offer services at marginal cost. The fund assures that through this new formula it will be able to offer projects to the administrations to increase the supply of housing. 

Blackstone’s land bank in Spain came from Banco Popular, which after its merger with Santander sold it through Aliseda. The fund acquired them after increasing its stake in the servicer to 51%. 

Aliseda has a team of 80 people dedicated exclusively to urban development management in Spain. The first major project where the servicer wants to implement its new strategy is Sareb’s Neo Project, a tender launched by the entity to find a partner to help it manage a portfolio of land valued at 1.12 billion euros, on which it is planning to build 60,000 homes.

Original Story: Eje Prime |News
Photo: BlackStone Linked In
Edition & Translation:
 Prime Yield

Cerberus buys a €500 million REO portfolio from Cajamar

Spanish cooperative bank Cajamar has agreed the sale of a real estate portfolio (REO) composed of 6,000 assets with a total Face Value of about 500 million euros to a subsidiary of Cerberus Capital Management LP. The transaction, which is subject to all necessary corporate and regulatory approvals, is expected to close by the end of 2021.

The portfolio, named “Jaguar”, is composed of 6,000 residential assets, commercial premises, offices, and land. The assets are located mainly in Andalusia, the Valencian Community, Catalonia, the Balearic Islands, and the Region of Murcia. 

This transaction represents the largest NPE transaction in the Spanish market since the outbreak of COVID, and the largest divestment ever completed by Cajamar. 

Alantra acted as financial advisor to Cajamar on the transaction, which represents the fifth project completed for the Spanish bank after Projects Baracoa, Escullos, Galeón, and Tango.

Uría Menendez acted as legal advisor Cajamar, while Clifford Chance was the legal advisor of Cerberus.

Original Story: Cajamar | News
Photo: Cerberus
Edition & Translation
: Prime Yield 

Santander sells 600 million NPL portfolio to Marathon

Banco Santander agreed to sell a nonperforming loan (NPL) portfolio to Marathon Asset Management LP as part of its strategy to clean its balance sheet, according to a news advanced in first-hand by the Spanish newspaper El Confidencial.

According to a source familiar to the transactions quoted by the newspaper, the Spanish bank has disposed of 600 million euros of NPL, which the U.S.-based fund bought for 100 million euros. This is the first time Santander has offloaded default loans since the coronavirus pandemic began.

This portfolio is largely made up of default loans from small and medium-sized companies, particularly hotel firms.

Original Story: Market Watch | Carlos Lopez Perea 
Photo: Photo by Jason Hochman from FreeImages
Edition & Translation:
Prime Yield

Spain’s banks lay groundwork for post-COVID consumer spending boom

Spain’s banks, their margins slashed during the pandemic, are betting on a high-yield route back to profitability through consumer loans – by encouraging lockdown-weary customers to spend big on cars, holidays and home improvements.

Consumer lending on average makes up just 7% of those banks’ loan books, though yields on that business are generally several times higher than on mortgages.

It plummeted as COVID-19 peaked and, with the risk of defaults on loans taken out before the pandemic not yet eliminated, some in the industry caution that it may be too early to push millions of Spaniards into taking on more debt.

But, as they struggle to earn money elsewhere in a low-interest environment, several banks are targeting consumer lending as a growth area.

Caixabank, Spain’s biggest domestic lender by assets, began offering six million of its customers pre-approved credit in May, and Santander has made similar offers worth 90 billion euros.

Marketed as “MyDreams”, Caixabank’s programme is designed for purchases of electronics, household appliances or refurbishment projects and carries yields of up to 11.5%. The bank expects it to be one of its main earnings drivers in 2021.

“If consumption is reactivated, consumer credit will be too, and that can be a source of improved profitability,” said Eduardo Areilza, senior director at consultancy Alvarez & Marsal.

BBVA meanwhile, expects a “forced build-up” of pandemic savings, EU funds and progress with vaccinations to increase car purchase by 8% in 2021 and by 24% in 2022 and, for that purpose, offers eight-year loans of up to 75,000 euros at up to 6.9% on its web page.

By comparison, average mortgage returns are around 1.5%, according to Bank of Spain data.

“Car purchases in Spain are typically financed and banks will grab part of that pie,” a retail banker said.

Analysts at Credit Suisse and Jefferies see signs that consumer loan activity is bottoming out and expect a resurgence.

“Consumer lending has been typically under pressure during COVID (…) but we would expect momentum to pick up through the rest of the year as lockdowns ease,” Jefferies said.

A Spanish lender’s retail executive told Reuters that the worst of the pandemic seemed to be over and “in this context we are definitely going to be active in consumer loans.”

RISK VERSUS REWARD

There are already signs of such activity.

At mid-sized lender Liberbank, new consumer lending rose 7.9% year on year in the first quarter, nearing pre-pandemic levels. In March, month on month, it rose 25% at Santander and 19% at Sabadell.

Jefferies expects the pickup to boost Spanish banks’ profitability, which in 2020 turned negative.

Lenders’ return on equity (ROE) – a measure of profitability – fell to -3.6% in the fourth quarter, below the average of 1.9% of euro zone banks, according to ECB data.

A less stable credit environment was a factor in that drop, with Spanish banks’ bad loan provisions rising to 8.7 billion euros in 2020 as a whole.

In late April, the country’s central bank urged lenders to set aside even more cash to cope with a potential rise in bad loans.

In consumer lending, the bad loans rate rose to 5.52% in the first quarter from 5.13% in the fourth.

That’s still a far cry from the peak of 8.2% that, according to Reuters calculations, it reached in June 2009, at the height of the financial crisis, let alone the 13.6% peak for overall loans hit in the crisis’ aftermath in December 2013.

Original Story: Reuters | Jesús Aguado
Photo: Photo by Xexo Xeperti from FreeImages
Edition: Prime Yield

CaixaBank resumes the sale of 576 million in mortgages that was halted by covid

After the Louvre and Hermitage projects launched in 2020, the Catalan entity has launched the MoMA Project, with which it hopes to sell to opportunistic funds delinquent mortgages valued at 576 million, according to financial sources consulted by El Confidencial newspaper.

The second-largest Spanish group did not comment. These are doubtful mortgages (with more than 90 days of non-payment) that it had already tried to sell before covid-19 was extended, within another larger portfolio known as Tackle, according to the sources consulted.

Although they are pre-Bankia assets, this is the first operation that CaixaBank has put on the market since it absorbed the nationalised entity. The merger has increased the group’s non-performing loans from 8.7 billion to 14.1 billion and net real estate assets (discounting provisions) from 1.1 billion to 2.5 billion. In gross terms, this would be around 4.3 billion. Thus, the group chaired by Goirigolzarri has problematic assets valued at 18.4 billion on its balance sheet, which it needs to lighten before the default derived from the current pandemic crisis picks up.

Even so, the pressure from the European Central Bank (ECB) for all banks to get rid of toxic assets is at its maximum. CaixaBank has therefore decided to speed up this MoMA operation and could be preparing others to close before the end of the year.

This operation covers 5,700 credits from 3,700 creditors who initially requested 576 million, according to information distributed by KPMG to investors. The unpaid amount stands at 495 million. The portfolio is secured by 4,500 properties, which are mainly located in Madrid, Barcelona and Seville, and have a valuation according to the Big Four of 775 million, well above the value of the credits.

Singular Assets
The transaction includes some higher quality assets – properties worth more than one million euros – in locations such as Mallorca, Boadilla del Monte, Pozuelo de Alarcón, Costa Brava, Xàtiva and Barcelona. This operation represents a new litmus test for the sector, after a standstill in the sale of unpaid mortgages caused by operations carried out by Sabadell in 2020, according to the sources consulted. Thus, this entity lowered prices to a level that made it difficult for other banks to go on the market, due to the impact it could have on provisions.

Original Story: El Economista | J. Zuloaga
Photo: CaixaBank website
Translation & Edition: Prime Yield

Santander prepares to sell a portfolio of 1,500 million assets

The Spanish bank is negotiating two sales transactions to Cppib and Cerberus without a competitive process to clean up its properties in Spain.

The bank chaired by Ana Botín is negotiating two sales of troubled assets worth €1.5 billion with the Cppib and Cerberus funds, according to El Confidencial. The bank is negotiating both through a non-competitive process, without giving other investors the option to compete with the funds. These two processes are in addition to a portfolio that the bank already has on the market: the EUR 600 million Talos Project, for which it has received offers from Fortress, Marathon and Tilden Park. In total, Santander has begun the sale of assets worth more than EUR 2,000 million. Through these operations, the bank seeks to reduce its non-performing loans, which are among the highest in the country since the purchase of Popular. The operation underway with Cppib, a Canadian pension fund, covers the mortgages it ruled out buying until 2020, when it reached an agreement with Santander. The fund entered the Spanish market three years ago with the purchase of non-performing loans. On the part of Cerberus, the negotiation would cover unpaid credits worth 500 million euros. Santander has started selling assets worth more than 2,000 million euros.

According to a study by Prime Yield, the sale of bad loans by banks will soar in 2021 and could exceed 7,100 million euros, continuing with the strategy initiated last year by which between the second and third quarters they reduced the stock of NPLs (Non Performing Loans) by 2,400 million euros. Up to March, 700 million euros were transacted. Despite the banks’ efforts to get rid of the product, Spain continues to be the third country in the European Union with the most NPLs. Leading the way is France, with 125.4 billion NPLs, accounting for 2.3% of its total portfolio, and Italy, with 98 billion NPLs, 5.4% of its total stock.

Original Story: EjePrime.com
Photo: Website Grupo Santander
Translation: Prime Yield

Santander prepares to sell €700 million of distressed commercial loans

Santander is preparing to sell €700 million worth of doubtful trade receivables, financial sources have confirmed to elEconomista. The divestment is, according to the same sources, at an initial stage and is being designed if it will be carried out as a block sale or divided into different portfolios, something that will be decided depending on the appetite of investors interested in these credits. In any case, the idea is to sell them during the course of this year.

With this operation, Santander recovers the pace of sales of non-performing loans, after a year in which the sector was at a standstill due to the pandemic. Santander’s real estate activities unit, integrated within Spain, has EUR 2,781 million in gross customer loans for real estate activity on its balance sheet, of which €924 million are classified as non-performing. Last year it only reduced €24 million of the total with portfolio sales, recoveries and subrogations by third parties, compared to the €1,685 million it reduced in 2019 or the €1,267 million in 2018.

Despite this slowdown in the drain on this type of assets, Santander closed the first quarter of the year with an NPL ratio of 3.20%, lower than in December, when it stood at 3.21%. At the level of Spain, the area with the highest NPL ratio of the whole group, it also continued to fall from December 2020 to March 2021, from 6.23% to 6.18%. This ratio could rise as the loan moratoriums granted expire. The group approved loan deferrals totalling 112 billion, of which 96 billion have expired, and of these, 5% have been classified as doubtful.

Original Story: El Economista | Araceli Muñoz and Eva Díaz
Photo: Santander Facebook
Translation: Prime Yield

CaixaBank rules out mortgages and deposits as strategic in the future

The new CaixaBank started up just 10 days ago after the absorption of Bankia and its CEO, Gonzalo Gortázar, has already outlined some details on the strategy of the largest bank in Spain to face the profitability problems of the traditional business due to the negative interest rates. The main executive of the entity has defended in an event organized by ‘El Confidencial’ that the traditional activity of deposits and mortgages no longer works and has opted to grow through new businesses.

The business of taking deposits and giving mortgages does not work with negative interest rates,” said Gortázar in a discussion where he coincided with the deputy governor of the Bank of Spain, Margarita Delgado. The CEO of CaixaBank has indicated that “today” the function of taking deposits “makes us lose money”. And it considers that this loss is only cushioned “in part” with the granting of loans. “We want them to bring the money to the bank but you see that something does not work if such an important function is not profitable, but quite the opposite,” stressed the manager.

Gortázar has acknowledged that before the pandemic the market was counting on a rise in interest rates soon, but now the situation is different. “We have been with negative rates for five years and the market expects there to be at least another five,” stated the CEO of CaixaBank. To this he added that, with the current demographic and economic model of the euro zone, “you have to think that interest rates are going to be very low for life.”

In this sense, Gortázar has pointed out that a consequence of this monetary policy is that it affects the profitability of the bank, although he has clarified that he prefers “these secondary effects” to a “disease” due to a credit crisis, as happened after the bursting of the housing bubble. This means that “the return on credit production is not enough to compensate for losses on deposits” and therefore advocates “seeking new income for the banking system.

We have to broaden the vision outside the box, so that the numbers add up. If not, we can only continue cutting costs and dwarfing ourselves, and that, in the end, is a trip to zero”, defended Gortázar during the discussion. The manager has recognized that the way of charging more commissions to clients so that the bank offices remain open “do not make practical sense” because “people do not accept them and do not understand them.”

It is at this point where the CEO of CaixaBank is committed to “offering more things” to customers, in order to find new revenue streams for banking. In this way, he advocates moving from a “banking services” company to a “financial services” platform. This section includes activities such as insurance or investment funds. In both businesses, CaixaBank has seen its dominance position strengthened with the absorption of Bankia. “We have to find a joint package that works,” said the manager.

These activities are the ones that are moving the banking sector in recent years since they allow new income in commissions for the management of their clients’ assets, compared to income from interest on loans that is in decline. More than a quarter of the fees charged by banks in 2020 already came from investment funds, pension plans or insurance.

To these businesses, Gortázar has indicated that others are being added in the bank in recent times, such as activities “more at the limit” of the financial business field such as mobile financing or renting. The sale of alarms also appears among the attractive businesses for CaixaBank, where it has an alliance with Securitas Direct. All these activities, he pointed out, “already offer us almost 100 million euros in the income statement”.

Original Story: Spain News | Diego Larrouy
Photo: Caixa Bank website
Edition: Prime Yield

Abanca acquires the Novo Banco’s retail network in Spain

Abanca, the heir group of the old Galician savings banks, has closed the purchase of the retail network from Portugal’s Novo Banco in Spain. After the operation, Abanca, will tottal 71,338 million euros in assets owned and 42,368 million of loans to customers under management, 46,037 million in deposits and 11,789 million in off-balance-sheet liabilities. It will have 6,312 employees and 745 offices.

With this, the Galician entity reports that it reaches 100,000 million in business volume and will increase its presence both in retail banking and in the business of companies. The group assures that “the purchase presents a low execution risk and minimal capital consumption.” The agreement contributes 4,287 million of business volume and 10 branches, in addition to 172 employees and 102 financial agents. The closing of the operation is awaiting the authorizations of the competent authorities.

The bank defends that the operation “strengthens” its presence in Spain, especially in Madrid and in “strategic” businesses for the entity. The first is the Personal and Private banking business that has already grown in recent years with the development foreseen in its Strategic Plan and with the purchases of the Deutsche Bank PCB network in Portugal, that of Banco Caixa Geral in Spain and, more recently with the acquisition of Bankoa. The second of the axes that will be reinforced with the purchase of Novo Banco’s Spanish network is the business of companies, especially in off-balance-sheet operations and foreign activity.

In addition, Novo Banco will provide growth potential in lines such as insurance activity. The insurance business is in full growth in Abanca’s strategy after the relaunch of the life insurance company and the creation of Abanca Seguros Generales together with Crédit Agricole Assurances, which already has permission to operate and which will launch its first products own in the next few weeks.

Abanca adds with this operation a new milestone in the construction based on mergers of the banking group that emerged from the old savings banks and is its sixth operation in seven years. The first was in 2014, with the integration of Banco Etcheverría. After that, in 2017, came the purchase of Popular Financial Services and a year later, that of Deutsche Bank PCB. That same year, Abanca added the business of another Portuguese bank in Spain, Caixa Geral. Last year it incorporated Bankoa, whose integration will take place throughout this year.

Original Story: Spain News | News
Photo: Abanca website
Edition: Prime Yield

Almagro Capital plans to invest €1 billion in reverse mortgages

The investment strategy of reverse mortgage purchase by Socimi Almagro Capital consists of acquiring real estate from older people when they decide to monetize their illiquid savings concentrated in their habitual residence, but staying in the same home for life.

In this sense, the company has an ambitious growth plan for the coming years. Currently, it has a portfolio of a portfolio of 83 homes and an investment of about 40 million. But the objective of the Socimi is to multiply the assets by 20 in the next three or five years, according to Bruno Bodega, CEO of Almagro Capital, to El Economista.

For this, the firm expects to have a capital of 500 million that will allow them to make an investment of 1,000 million in that period. From the Socimi they assure that they already have the “commitment” of some of the partners who entered the last capital increase.

However, the CEO of the Socimi points out that beyond large investors, they want many individuals to enter, because it is a good and comfortable investment. In this regard, he clarifies that «we believe that it is better to participate in 0.1% of a thousand houses than to have one». According to the manager, the share offers an annualized return of 5%.

In Spain, only Almagro Capital operates in the reverse housing model, but in Europe its use is much more widespread. For example, in England and France it is a formula that is highly developed and transactions worth around 4,000 million euros are closed.

Original Story: Iberian Property | Alexandre Lima 
Photo: Almagro Capital site
Edition: Prime Yield

Unicaja and Liberbank shareholders approved their merger to create Spain’s 5th largest bank

Shareholders of Spanish lenders Unicaja and Liberbank approved their merger, paving the way for the creation of the country’s fifth biggest bank in terms of assets.

The merger – under the terms of which Unicaja will fully absorb its rival to create a bank with 110 billion euros in assets – will bring Spain’s number of banks to 10, down from 55 prior to the 2008 economic crisis.

This marks a further acceleration of the sector’s consolidation in Spain after the merger between state-owned Bankia and Caixabank was completed last week to create the largest domestic lender.

The Unicaja-Liberbank deal will allow the combined bank to save 192 million euros annually and reach a capital ratio of 12.4% following 1.2 billion euros of merger-related costs, the banks said.

“The (merged) bank expects to be more profitable and efficient, which will result in higher organic capital generation to finance its growth, and higher recurring dividends,” Liberbank Chief Executive Manuel Menendez told shareholders.

Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the coronavirus pandemic is forcing a focus on further cost-cuts, including through tie-ups.

Unicaja shareholders approved a total payment of 16.91 million euros against 2020 results, while Liberbank approved 7.86 million, both in accordance with the 15% dividend cap set by the European Central Bank (ECB).In December the ECB decided to let banks pay out part of their cumulative 2019-2020 profits to shareholders if they have enough capital, easing a blanket ban on dividends and buybacks set during the first wave of the coronavirus crisis.

Original Story: Reuters
Photo: Unicaja site
Edition: Prime Yield

SPAIN Spain’s decade-old ‘bad bank’ liabilities push debt to 120% of GDP

Spain’s public debt reached 120% of gross domestic product last year, above the previously reported 117.1%, the Bank of Spain said on the end of March, after adding ‘bad bank’ liabilities stemming from the financial crisis a decade ago as demanded by Brussels.

The debt-to-GDP ratio spiked from 95.5% at the end of 2019 and 114% in the third quarter of 2020, mostly due to increased spending to cushion the effect of the COVID-19 pandemic and a simultaneous economic slump.

The higher final debt ratio confirms what a senior government source told Reuters last week.

The ‘bad bank’, known as SAREB, was created to take on over 50 billion euros in bad loans and other toxic assets from nine Spanish savings banks during the financial crisis in 2012 as part of an international bailout for Spain’s financial sector.

The accounting change follows demands from Eurostat, the European Union’s statistics body, that the bad bank, known as SAREB, should be considered a public entity. 

Original Story: ReutersAuthor: Aida Pelaez-Fernandez 
Photo: Photo by Victor Iglesias from FreeImages
Edition: Prime Yield

Bank NPLs to peak at 6.5% to 8% in 2022, says Fitch

Fitch agency predicts a difficult 2022 for Spanish banks. The rating agency estimates that the financial sector will reach a peak in the default rate in 2022, which will be around 6.5% and 8%, although in any case it will depend on the evolution of the economic recovery.
Fitch Ratings expects Spanish banks’ asset quality to weaken as borrowers’ ability to pay comes under pressure from the consequences of the coronavirus crisis, particularly when the support and containment measures expire,” the agency said in a note.

In the opinion of the rating agency’s experts, in 2020 there was already “evidence” of a deterioration in asset quality due to the consequences of Covid-19, although non-performing loans fell to 4.2%, down from 4.5% at the end of 2019.

Nevertheless, Fitch stresses that throughout the year, especially in the fourth quarter, banks have been identifying potential risks and have increased the number of loans classified as Stage 2, i.e. on special watch, the step prior to considering them doubtful. “SME and consumer lending will be the sectors most vulnerable to economic stress,” he concludes.

Original Story: El Independiente | Elena Lozano
Photo: Photo by Lotus Head in FreeImages.com
Translation: Prime Yield

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