The rate of non-performing loans (NPL) fell slightly in September from 3.44% to 3.43% in the midst of a slowdown in financing costs and brings the balance of NPL to over 40.4 billion.

One of the main achievements of Spanish banks after the rise in interest rates has been to keep the NPL ratio at historically low levels. The favourable evolution of the economy and the resilience of the labour market have contributed to this downward trend, pushing the NPL ratio down to its lowest levels ever. According to the latest data published by the Bank of Spain (BdE), the default rate closed September at 3.43%, slightly lower than the 3.44% recorded the previous month.

It is again close to the 3.42% it reached in June, coinciding with the first cut in the price of money implemented by the European Central Bank (ECB). In year-on-year comparison, the rate contracted by a little more than one tenth of a percentage point from 3.56%, which translates into 1,627 million less doubtful loans, down to 40,454 million. The slowdown in the Euribor has contributed to this trend and gives mortgage holders some respite. It should be recalled that the benchmark index of the mortgage market in Spain closed the ninth month of the year below 3%, something that had not happened since the end of 2022.

The organisation differentiates between the aggregate delinquency of banks, savings banks and cooperatives and that of consumer finance companies. In this regard, the former ended September at 3.32% and fell in the same proportion as the overall figure, although the amount rose slightly by 19 million to 37,420 million. Compared to a year ago, it fell by one tenth of a point. At the same time, in the case of consumer loans, the rate fell by more than two tenths of a point to 2.48%, although the amount of defaults only fell by two million per month.

The vertical rise in the cost of financing more than two years ago alerted the banking sector to a possible upturn in NPL, which in the end has not occurred. The measures promoted by the government to help mortgagors in difficulty have also helped to contain this rate, which peaked last February at 3.62%. This behaviour is recorded in the midst of an upturn in the granting of loans, which has been rising in double digits throughout the year.

In fact, the demand for mortgage loans has just experienced its best September since 2009 with the granting of 4,885 million in financing for housing. In the same month fifteen years ago, loans of this type were granted for a value of 5,235 million. The difference with that time is that the bursting of the housing bubble had already begun to hit the economy and the cost of financing hovered around the barrier of 1%, while at the end of the third quarter it stood at 3.5%, 0.25% higher than it oscillates at the present time.

Looking ahead to the final stretch of the year, the sector expects to remain at these levels in a context marked by the activation of the countercyclical buffer of 0.5% in a scenario of ‘moderate risks’, which will apply from October 2025. Subsequently, and depending on systemic risks remaining at standard levels, the percentage may be increased by another half a percentage point at the end of next year to be applicable twelve months later.

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

Axactor ASA (Axactor) entered into an accretive €83 million sale of NPL portfolios in Spain. In parallel, the company announces an anticipated negative revaluation of the remaining portfolios for the fourth quarter 2024.

Axactor has entered into a binding agreement to sell NPL portfolios for a total of €83 million, representing a 2% premium over book value. The transaction represents approximately 6% of Axactor’s total NPL portfolio and the proceeds from the transaction will be used to reduce debt. The positive impact on cash metrics, such as cash EBITDA, is significant, supporting covenant compliance for at least the next four quarters.

“We believe this transaction demonstrates Axactor’s commitment to enhancing financial stability while navigating challenging market conditions. This strategic sale not only supports covenant compliance but also provides flexibility to manage our portfolios proactively,” says CEO Johnny Tsolis.

Additionally, as part of the routine quarterly NPL revaluation process, Axactor has booked a net negative NPV of changes in collection forecasts of €12 million so far in the fourth quarter, and October collections ended €3 million below forecasts (corresponding to a collection performance of 90%). Further meaningful negative revaluations are anticipated before quarter-end, and will be published as part of the fourth quarter 2024 report. The revaluations do not have any cash impact, and as such do not impact neither the interest coverage nor the leverage ratio covenants. There is sufficient headroom under the loan-to-value covenants to remain compliant also after the anticipated revaluations.

Together, these actions provide the company with a strengthened covenant position, further reinforcing the balance sheet.

Original Story: Axactor ASA
Edition: Prime Yield

Banco Santander is releasing more unproductive assets from an old acquaintance. The bank has sold unsecured re-performing loans (RPL) to individuals and SMEs to US fund Balbec Capital for a total of around 90 million euros, market sources told elEconomista.es.

The structure of the sale is unique, as the company will continue to service the current loans, along with other mechanisms to avoid any reputational risk with clients and is linked to an agreement that guarantees the fund the future purchase of the loans that may go unpaid.

“Re-performing debt consists of healthy financings that have been restructured or defaulted in the last year and has become an asset that is increasingly important in the portfolio sales market.

Despite the fact that they are current, the fact that they have suffered payment incidents or have been restructured implies a consumption of provisions for the banks, which see an incentive to transfer the risk in the possibility of reducing this burden, although they usually retain their management due to the link with the client. In fact, many transactions are carried out through securitisation, which allows the risk to be deconsolidated while maintaining this link.

Santander relied on Alantra for the operation now being completed, a consultant it has also used this year to carry out the Turf and Frankel projects, and in previous years for the sale of the Model and Titan projects, among others.

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

Sabadell and Cerberus are in court in a dispute valued at 365 million euros.

Sabadell and Cerberus are facing each other in court with a dispute valued at €365 million . The bank claims the U.S. fund for not paying what, in its opinion, it owes for the purchase five years ago of three portfolios of real estate assets residing in Spain, according to the Financial Times.  

The origin of the conflict goes back to the process carried out by Sabadell to “clean up” the toxic assets that accumulated on the balance sheet after the financial crisis. Like the rest of the banks, the entity packaged the damaged exposure and sought to deconsolidate it by selling it to a third party.

The entity thus agreed in 2018 and, after a competitive process,to sell to Cerberus theportfolios ‘Challenger’, ‘Coliseum’ and ‘Rex’, which had properties of all types for a total gross value close to €6,414 million.

The transaction consideration set at around 3,500 million euros and, as usual in these operations, both partners agreed to defer in time up to 21% of the total amount -some 600 million-, according to sources close to the judicial process.

Some of the properties in the portfolio lacked the relevant registration in the Spanish property registry due to issues such as being in the process of repossession or auction under development. And under the agreement, Sabadell must resolve these registrations to regularize the situation of the properties, with a three-year period until the end of the 2022 financial year.

The bank anticipated the works on the properties in the portfolio ‘Coliseum’and Cerberus paid the deferred payment associated with it – about 170-180 million-. The amount outstanding was thus reduced from around €600 million to around €400 million.

The conflict came with the ‘Challenger’ and ‘Rex’ portfolios. Sabadell complied with the records in a package of real estate valued at €365 million that now demands in court, but the American fund refused to support the payment alleging that it had not been satisfiedon the totality of the assets.

Following Cerberus’ refusal, Sabadell sued the fund in January 2023 in the High Court of Justice in England because the fund’s company guarantor of the agreement formalized in Spain is subject to British law.

The trial was held last week and the magistrate in charge of the case advanced his intention to issue a ruling before Christmas, in the second week of December. The ruling could be final because it is very unusual to file appeals in the United Kingdom and is reserved for very narrow issues.

Original Story: El Economista
Edition and translation: Prime Yield

The US bank has set its sights on the credit cards of Bankinter, which has put a portfolio of loans worth €450 million up for sale.

Goldman Sachs has renewed its appetite for Spanish debt portfolios. A year after it completed the sale of all its real estate portfolios in our country, portfolios acquired during the great financial crisis, it has decided to make another move in Spain.

This time it is focusing on Bankinter’s credit cards, a company that has put up for sale a portfolio of loans worth €450 million.

According to Bloomberg, the US company is the favourite to acquire this portfolio, which consists of loans to 50,000 former credit card holders.

The decision by the bank, chaired by María Dolores Dancausa, to sell this portfolio is part of a general move by the sector to control the default rate, which has been a concern following the rise in interest rates.

Bankinter’s NPL ratio stood at 2.2% in the second quarter of this year, slightly above 2.1% in 2023, a ratio that will reach 2.5% for its Spanish business, below the 3.4% estimated by the Bank of Spain for the entire system in our country.

The process initiated by Bankinter is no exception, and several Spanish banks are already trying to get rid of billions of euros in view of the new interest rate scenario.

Original Story: El Confidencial | Author: Cotizalia
Edition and translation: Prime Yield

BBVA has kicked off the sale of a portfolio of 600 million euros in non-performing mortgages, a process that is part of the bank’s interest in improving its capital ratio. The entity chaired by Carlos Torres has hired Alantra to carry out an orderly process of these loans, a transaction that is expected to go to market in the coming days, according to Bloomberg. This is one of the largest portfolios that BBVA has brought to market in recent years and, moreover, comes at a critical time for the bank, which is in the midst of a takeover bid to try to acquire rival Banco Sabadell.

The sale of portfolios of doubtful assets is one of the bank’s formulas for freeing up provisions and, with them, improving its capital ratios. A reasoning that seems to be behind both BBVA’s move and the portfolio that Sabadell has also put on the market.

The Catalan entity has put up for sale the third portfolio of doubtful loans it has launched so far this year, a portfolio comprising 380 million euros in unpaid consumer and SME loans. These are unsecured loans, which are usually sold to opportunistic funds at significant discounts. Between 2023 and 2024, BBVA has also placed three portfolios on the market with a total volume of €1,100 million.

Original Story: El Confidencial
Edition and translation: Prime Yield

DoValue, Hipoges (KKR) and Anticipa-Aliseda (Blackstone), three of the largest servicers in Spain, have major management contracts due for renewal in Spain before the end of 2025.

Specifically, DoValue’s rights to a Santander portfolio (approximately €20 billion) and Hipoges’ (€14 billion) and Anticipa-Aliseda’s (11,400 million) rights to the Sareb portfolio will expire by that date. In total, around 45 billion, according to figures from Atlas Value Management, which EL ESPAÑOL-Invertia has had access to.

It should be recalled that the management of a Cajamar portfolio, in which Haya Real Estate – now Intrum – held a number of rights, was also due to expire this year. Last July, the Almeria-based rural savings bank announced that it would manage all the assets internally and would not renew the contract with Intrum. Intrum had been managing the assets for 10 years and had a total of 7.4 billion in assets at the time of the crisis.

Once this first round of renegotiations is complete, it will be Intrum, currently the largest servicer in Spain in terms of volume, that will have to put on the overalls.

In 2026, their rights to a €4 billion portfolio from CaixaBank, another €3 billion from BBVA – inherited from Haya – and another €2.5 billion from Ibercaja expire. In 2027, they also have another portfolio from CaixaBank, also inherited from the company acquired in 2023, for €9.600 billion.

Source: El Español | Author: Diego G. Camporro
Translation and edition: Prime Yield

Canada Pension Plan Investment Board (CPPIB) has put a portfolio of distressed Spanish loans up for sale, as the fund works to reduce its exposure to the country built up during the financial crisis last decade.

The sale comprises loans with a face value of around €300 million in unsecured, non-performing loans, according to people familiar with the matter. Canada’s largest pension fund obtained the assets bundled along with a larger portfolio and they will likely be sold at a heavy discount to par, still generating returns, the people said, asking not to be identified discussing private details.

The Canadian pension fund previously acquired substantial debt assets, including real estate portfolios, from Spanish banks such as Banco Santander SA. While working down that exposure, the fund’s broader strategy involves nearly doubling the size of its private credit holdings over the next five years.

Earlier this year, CPPIB had explored the sale of a separate portfolio with a face value of around €1 billion although that process is now on hold, according to people familiar with the matter.

CPPIB declined to comment on the potential sale.

Original Story: BNN Bloomberg | Author: Jorge Zuloaga and Paula Sambo
Edition: Prime Yield

The volume of non-performing loans (NPL) held by banks on their balance sheets at the end of May was €42.353 billion, an increase of €212 million compared with April, bringing the ratio to 3.60%, slightly above the 3.59% of the previous month, according to the latest data published by the Bank of Spain.

Compared with May 2023, there was a fall in the volume of NPL of €475 million, with a ratio of 3.59%. The difference between one year and the next is therefore due to the fall in the total balance of credit, which increases the proportion of NPL among all the credit that the bank has.

Specifically, at the end of May, the total credit balance stood at 1,174 billion, a reduction of €430 million compared with April. Compared with May 2023, the volume of bank credit has been reduced by €16.969 billion.

The data broken down by type of institution show that the doubtful assets ratio of deposit institutions as a whole (banks, savings banks and cooperatives) closed May at 3.49%, two basis points higher than in April and the same level as in May 2023.

In May, this type of institution recorded a doubtful assets portfolio of €39.073 billion, €170 million more than in April and €698 million less than in May 2023.

Credit financial institutions saw their NPL ratio rise in May to 6.64%, compared with 6.58% in April.

In absolute terms, the volume of doubtful loans of this type of institution was €2.98 billion at the end of May, 41 million more than in April. Compared with the end of May last year, the doubtful balance has been reduced by €313 million.

According to data from the Bank of Spain, provisions for all credit institutions stood at €29.984 billion in May, a decrease of €51 million compared with April. Compared with a year earlier, provisions fell by €885 million.

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

Cerberus Capital Management LP is one of the frontrunners to buy a Spanish bad loan portfolio worth more than €2 billion from Hoist Finance AB, according to people familiar with the matter.

The process is in final stages and expected to close by late July, according to the people, who cannot be named as discussions are private. Cabot Credit Management Ltd and Kruk SA are also vying to acquire the assets, according to the people. 

Officials for Cerberus, Hois, Kruk and Cabot declined to comment. 

Hoist is a long-term investor in the Spanish credit sector and the country is its third largest market by assets, at around 16%, after Italy and Poland. The Stockholm-listed company recently agreed to buy a €270 million portfolio of non-performing mortgages (NPL) from Banco Santander SA, Bloomberg reported.

The sale being negotiated with Cerberus is part of Hoist’s strategy to regularly sell assets to free up balance sheet for new deals.

Cerberus is also in the process of trying to acquire about €7 billion in European bad loans from Norwegian debt collector Zolva Group. The loans are mostly from Spain and Norway.

Original story: BNN Bloomberg | Author: Jorge Zuloaga
Edition: Prime Yield

Defaults in consumer credit have once again experienced an upturn that puts banks on their guard. There are several portfolios of doubtful loans on the market to reduce the NPL ratio, which has once again exceeded 7% and has reached the highest level in eight years.

This is shown by the latest data from the Bank of Spain on doubtful loans in financial credit establishments (EFC), which go up to April. These institutions specialise in consumer credit. Although not all consumer credit is in this niche – some banks channel it without CFCs – it is the best approximation for assessing the trend and health of the segment.

Since the covid crisis, the delinquency rate of SCIs has been on an upward trend, although it is gradually experiencing a significant decline, which can be explained by the sale of doubtful portfolios by these institutions to opportunistic funds that buy unpaid loans at a discount. In this case, the discount applied can exceed 90%.

The latest statistics point to a new increase in non-performing consumer loans, up to €3,060 million, compared with €2,852 million in the same month of the previous year. There has been a year-on-year increase of 7.3%, and the NPL ratio has risen to 7.18%, the highest level since May 2016.

On several occasions over the past four years, NPLs have touched 7%, but have always been reduced afterwards by the loan drain. On this occasion, the increase in NPLs can be explained both by the rise in NPLs and by the fall in the total volume of outstanding credit of SCIs, which acts as the denominator, and which fell by €1,111 million between March and April, to €42,638 million.

The Bank of Spain has observed this further deterioration in consumer credit quality, although it is not alarming. As the deputy governor and acting governor, Margarita Delgado, pointed out at the APIE forum in Santander, there has been an 8% increase in loans under special surveillance in consumer lending.

 Consumer credit is always the first warning sign of a possible worsening of the stock of loans on banks’ balance sheets, as households always default sooner, in case of need, on a contract of this type than on a mortgage. These are loans with higher rates and without collateral.

In the banking balance sheet as a whole, the overall NPL ratio remains contained, and in April stood at 3.6%, with a volume of non-performing loans of €42,141 million, compared with a total outstanding stock of €1.17 trillion.

Original Story: El Confidencial | Author: Óscar Giménez
Edition and Translation: Prime Yield

The banks are facing a scenario of high interest rates in Spain with limited defaults, thanks to a good response from customers who are paying their debts and the transfer of the riskiest loans to non-regulated financial institutions. They sell them at a discount, but in return they get rid of some uncertainty and keep their balance sheet in check.

Last year, €17.7 billion worth of non-performing loans (NPLs) were sold in Spain, according to a report published today by Axis Corporate. The activity has been revived amid rising interest rates.

Of this amount, €8.2 billion was raised by traditional banks. There were two major transactions outside this regulated circuit: the sale of a €6 billion portfolio by the Norwegian multinational specialising in debt collection, Axactor, and the sale of a €2 billion portfolio owned by Blackstone and transferred to Cerberus.

Sareb, Santander and BBVA, among the most active

Within the regulated entities, Sareb – owned by the State through the Frob and several banks – sold NPLs to Axactor for 3 billion, integrated in a portfolio of NPLs called Victoria.

Other portfolio sales were carried out by Deutsche Bank to Cerberus for €1.6 billion and by Santander to several firms in four transactions for €1,707 million.

BBVA made three divestments for €830 million. These were, on the one hand, the Artemis portfolio, transferred to KKR, and, on the other, the Nairobi portfolio, which went to Cerberus and Kruk.

CaixaBank made two transactions valued at €645 million, one with Link and the other with Kruk, to divest a portfolio called Twister. Goldman Sachs sold a 350 million portfolio in Spain to Bank of America.

What is the distressed debt firm, as this type of company dedicated to problem assets is known, that has bought the most doubtful portfolios from banks? It is the US fund Cerberus, which has acquired portfolios valued at €4.51 billion.

Part of the result of all these movements is the low NPL ratio exhibited by Spanish banks. Santander, BBVA and Sabadell report ratios of between 3% and 3.5%, while CaixaBank, which is the most popular among retail customers in Spain, puts it below at 2.7%.

There are two banks in Spain, Ibercaja and Kutxabank, which have managed to bring their NPL ratio below 2%. The former stands at 1.6% and the latter at 1.2%.

Doubtful loans on banks’ balance sheets have fallen in Spain from 3.7% in 2022 to 2.75% in the second quarter of 2023, despite rate hikes and the fact that the unemployment rate is still the highest in Europe.

Original Story: La Vanguardia | Author: Iñaki de las Heras
Edition and translation: Prime Yield

Bankinter is looking to sell several loan packages collectively valued at around €550 million, joining other Spanish banks that are also shedding assets in an effort to lighten their balance sheets in the face of potential financial problems stemming from high interest rates.

Specifically, the Madrid-based bank is seeking buyers for a portfolio of non-performing loans (NPL) with a face value of more than €500 million and two smaller portfolios of NPL, people familiar with the matter told Bloomberg on condition of anonymity. The same sources added that Bankinter expects to complete the sale by the third quarter. According to the US agency, a Bankinter spokesman declined to comment on the deal.

Spanish banks are trying to shed billions in loans as higher interest rates threaten to take a toll on the economy and push more people into default. CaixaBank is also in the market with portfolios valued at around €1.1 billion, while BBVA sold a €500 million package last year.

Bankinter’s proposed deals are part of its ‘minimum NPL ratio strategy’ and are ‘a top priority’ this year, according to a marketing document accessed by Bloomberg. The large portfolio Bankinter is trying to sell consists of loans to 50,000 former credit card holders, according to the marketing document.

Bankinter’s consumer finance unit had a total of €4.7 billion in loans outstanding at the end of the first quarter, of which €1 billion was granted through debit and credit cards, according to a presentation to investors.

The second portfolio marketed by Bankinter contains mortgages secured by individuals and small businesses, and the third is made up of mortgages linked to multicurrency loans, some of which carry potential legal issues, according to the document seen by Bloomberg. The two packages have a combined face value of about €40 million.

Bankinter faces claims for its multicurrency loans that could cost it as much as €146 million, according to an estimate in its latest annual report. The bank has also made provisions of €77 million for legal proceedings for ‘usurious interest rates’ through its revolving credit cards and consumer loans.

Original Story: Cinco Dias | Author: Bloomberg
Edition and translation: Prime Yield

Banco Santander has sold one of its most anticipated projects to JP Morgan. This is the Zeta project, which consists of loans to large clients in the hotel sector. The US company will pay around 200 million. The operation was carried out at a discount of one third, as the perimeter of the loans was worth 300 million.

According to El Confidencial, the Spanish group is thus removing the loans granted to hotels from its balance sheet. Although they are now up to date with their payments, they have all been in arrears for more than 90 days. In this way, it avoids future provisions on these loans and the need to deal with defaults.

Santander was advised by EY and A&O Shearman, while JP Morgan was advised by Colliers and Linklaters. Other funds such as Apollo, Starwood and Spanish group SVP also showed interest during the process. Santander’s NPL ratio stood at 3% in March 2024, down 19 basis points from a year earlier. The coverage ratio (provisions to NPLs) was 49.8%.

Santander also overtook BNP as the most capitalised bank in the European Union. This milestone came about because BNP Paribas’ share price on Tuesday discounted the dividend it will pay in the near future. When shares are quoted ex-dividend, there is always a downward adjustment in their value.

Original Story: El Confidencial | Author: Óscar Giménez
Edition and translation: Prime Yield  

CaixaBank SA is exploring the sale of €1.1 billion in non-performing loans (NPL) as it seeks to improve its asset quality

The Spanish lender is marketing two NPL portfolios that have already attracted potential bidders, according to documents seen by Bloomberg and people familiar with the matter. One is code named Oxygen and it has an outstanding balance of €610 million on about 7,000 unpaid mortgages. The other one, dubbed Cobalto, is comprised of about €500 million in unsecured loans to small and medium-sized businesses and consumers, the people said asking not to be named discussing private information.

A spokesperson declined to comment.

CaixaBank, Spain’s third-biggest lender, is taking the step to improve the health of its balance sheet, the people said. The bank has promised investors to keep its NPL ratio — a key metric of asset quality — below 3% this year.

The bank’s NPL ratio rose to 2.81%, or €10.8 billion, at the end of March, marking the second consecutive quarterly gain. The two increases were the first since CaixaBank bought rival Bankia over three years ago, according to data compiled by Bloomberg.

The increase partly happened because CaixaBank started applying “stricter criteria for the classification of non-performing loans within the prudential framework, thanks to rigorous and prudent management of credit risk,” it said in its earnings release last week. The metric is still “below the sector average,” it said.

CaixaBank has previously used disposals of NPL portfolios to clean up its balance sheet. Six years ago, it sold a real estate portfolio valued at €7 billion to Lone Star Funds.

Original Story: Yahoo Finance | Author: Bloomberg
Edition: Prime Yield

Spain’s bad bank Sareb (Sociedad de Gestión de Activos procedentes de la Banca), has sold a portfolio of non-performing loans (NPL) without associated mortgage guarantees, valued at €1.5 billion, to the Norwegian fund Axactor, which specialises in this type of operation.

As confirmed to EFE by Sareb sources, who did not disclose the proceeds of this operation, this is the second portfolio that the company has sold to this company, after transferring another one last year valued at €3 billion.

These are loans granted by the former savings banks to property developers, which remained unpaid when these companies went bankrupt and which are difficult to sell because they are not backed by any property or mortgage guarantee.

For this reason, the company has opted to package them in order to facilitate their purchase by this type of fund, which specialises in their recovery.

Sareb, which was created in 2012 to manage and sell the troubled assets of the former savings banks that received public aid, lost €2.198 billion in 2023, 46% more than in the previous year, due to capital losses on the assets sold, i.e. the differences between the book value of the assets and the selling price, and the increase in financial expenses.

However, the company managed to increase its income by 16%, to €2.748 billion, and to repay more than €1 billion euros of its debt, to around €29 billion at the end of 2023.

Original Story: Investing
Edition and translation: Prime Yield