The bank led by Mark Bourke continues to sweep the corners of the balance sheet before going ahead with the sale. It has placed on the market a portfolio of unsecured loans worth 300 million euros.
With strides towards sale, Novobanco continues its efforts to clean up its balance sheet. In the last few weeks it has put up for sale a portfolio of bad debts with a book value of 300 million euros, according to information gathered by ECO. Other banks such as Santander, BCP and Crédit Agricole are also on the market with operations totaling 400 million euros.
In the case of the bank led by Mark Bourke, the portfolio in question is made up of so-called “unsecured” loans; loan contracts without associated guarantees, which should remove some investor appetite for this so-called “Pegasus” portfolio. Interested parties had to express their interest by the beginning of this month. The process is continuing and the bank expects completion by the end of the year, according to what it announced to the market.
This effort to clean up the balance sheet is not unrelated to the plans that the bank (Lone Star, which holds 75% of the capital) has for the near future.
At the moment, Novobanco and the Resolution Fund are negotiating an early end to the contingent capital mechanism, which was created in 2017 when the bank was sold to the American fund and which will only end at the end of next year, in a move that will open the door to dividends and sales, something that is expected to happen in the first half of next year.
As ECO reported at first hand, the Ministry of Finance already has a version of the contract to put an end to the agreement, which will mean that the bank and the fund already have a basis for understanding. For Minister Joaquim Miranda Sarmento, there is even a great incentive to endorse the early termination of the mechanism:dividends of 250 million euros to the public coffers, which should result from the release of a thousand million euros of excess capital that Novobanco has accumulated over the last four years.
With the end of the dividendban, It is true that the major effort took place from the moment it was sold to Lone Star, taking advantage of the guarantee of loss coverage that the contingent capital mechanism provided between 2018 and 2021, having injected around 3.4 billion euros into the bank.Since 2016 until June, this effort has resulted in a reduction in the NPL (non-performing loans) ratio from 33.6% to 4.1%.
Even so, Novobanco still had 1 billion euros in non-performing loans on its balance sheet at the end of the first half.
A hectic end to the year in banking
The non-performing loans market is going through a hangover period after the massive sales of large portfolios (starting with Novobanco) in recent years.
But the last few months of the year brought some excitement with several banks active on the market. BCP has just sold the Spring Project, worth 265 million euros, with loans from Inapa and the promoter of the Algarve Autodrome, and has now put the Lyra Project up for sale, worth 90 million euros.
As the ECO also reported, the Crédit Agricole is also in the process of selling off a portfolio worth 93 million euros, mainly to small and medium-sized enterprises (SMEs).
Santander Totta (140 million euros), Bankinter (30 million euros) and Banco Montepio (amount not yet determined) are also in the market, according to various sources obtained by the ECO.
Santander Totta (140 million euros), Bankinter (30 million euros) and Banco Montepio (amount not yet determined) are also in the market, according to various sources obtained by the ECO.
Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield