NPL&REO News

KKR has put up for sale €700 million of NPL it bought from Novobanco in 2018

The KKR fund, which in 2018 won the race to buy a portfolio of problem loans worth €1.75 billion that Novobanco put up for sale, is reselling €700 million euros of that portfolio, dubbed the ‘Nata’ project, Jornal Económico understands.

On the shortlist to submit binding-offers are three candidates: the Balbec – LX Partners consortium; the British fund LCM Partners and Arrow Global.

According to our sources, the binding-offers must be submitted by 2 October.

KKR wants to close down the fund that bought the assets from Novobanco, which is why it went ahead with the sale.

The NPL portfolio that the KKR fund is selling is secured credit, i.e. with guarantees, so the ‘Nata project’ is essentially real estate.

The operation carried out in 2018 involved more than 100,000 credit exposures that were bought by the KKR/LX Partners consortium for €505 million and generated losses of €110 million for the bank, of which around €85 million were covered by the Resolution Fund.

Nata I was Novobanco’s first major packaged sale of NPL (loans at risk). In 2018, when the ‘Nata project’ was sold to KKR, there were two tranches. The first was worth €550 million with loans from 54 large companies, while the second tranche of €1.2 billion concerned NPL from more than 62,000 companies.

Fonte: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield

Gruas

€113 bn in loans to developers: Bank of Spain urges vigilance against brick risk

The Bank of Spain is not letting its guard down. Amid the debate for banks to resume lending to developers, the supervisor calls for “increased monitoring” of the banking sector’s exposure to bricks and mortar. And it puts the loans to companies linked to property development and construction at €113 billion at the end of 2023.

It represents a weight of 8.3% of total bank financing to the private sector (households and companies) in Spain. However, the Bank of Spain remains cautious for two reasons. The first is that most of it is in the form of variable-rate operations (almost 70% of the total), so that at the end of last year these companies would already have largely absorbed the rise in interest rates associated with the ECB’s monetary tightening cycle.

And second, because refinancing risks “appear contained, at least in the short term”. Just over 90% of the bank debt of companies in this real estate sector has a residual maturity of more than one year.

Identifying the accumulation of risks

“It is advisable to strengthen the monitoring of real estate exposures in the banking sector in order to improve the ability to detect the possible accumulation of risks and better measure the impact of their potential materialisation,” the Bank of Spain stresses in its latest Financial Stability Report.

The government wants to speed up the approval process for property developers as a key measure to reduce house prices. Although the banks are cautious and guarantee that they will maintain the criteria for approving loans according to their risk models as a containment dike, according to financial sources. The ghost of the 2008 crisis is still very much on banks’ minds.

In fact, the balance of loans for development and construction has already accumulated a fall of more than 80% from 2008 levels, according to updated data from the Bank of Spain. Since the start of the Cobid crisis, the fall has been 17%, deepening the correction from the 76% plunge recorded between 2008 and 2019.

Uncertainty after the wars

The Bank of Spain identifies the geopolitical situation as the main threat to financial stability, just as Iran attacked Israel this weekend and the shadow of a wider war is spreading across the world. In particular, it points to the risk of continued pressure on commodity, gas and oil prices, which could postpone the reduction in inflation.

“The potential remains for geopolitical tensions to negatively disrupt trade in energy and other commodities – and in commodities more generally – and to trigger sharp falls in the prices of risky financial assets. To the extent that these tensions translate into higher levels of economic uncertainty, their impact on economic activity could be significant,” the regulator warns.

Original Story: Vox Populi | Author: Rubén Sampedro
Edition and translation: Prime Yield

Portuguese are depositing more in banks

In January, €173.4 billion were deposited in Portuguese banks, almost €500 million more than in December.

In January 2022, the stock of deposits reached a record value of €173.4 billion, almost €500 million more than in the previous month, which represents an increase of 6.3%, according to data released by the Bank of Portugal (Bdp).

“At the end of January 2022, individuals had deposited €173.4 billion with resident banks, and companies €60.5 billion. During the month of January, these deposits grew by 6.3% and 17.4%, respectively, compared to January 2021”.

This means that the Portuguese have never entrusted so much money to banks as they do now, even though the remuneration offered by this type of applications is very low, writes ECO, noting that this is a trend that has accelerated with the pandemic.

Original Story: The Portugal News | TPN
Photo: Photo by Magda S from FreeImages.com
Edition & Translation: Prime Yield

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