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npl-reo Market News: Spanish Real Estate Intelligence

Portugal’s Novo Banco to Sell €3.3-Billion Portfolio of NPLs
21 March 2019 - Richard D. K. Turner According to an article published yesterday in the online economic journal Economia Online, the Portuguese bank Novo Banco has initiated the sale of a portfolio of non-performing loans (NPLs) called "Project Nata 2." The portfolio comprises a portfolio of 1,000 corporate loans in default, 70% of which are unsecured, worth €3.3 billion. The sale has already attracted the interest of several major international investors, including Bain, Cerberus and KKR. Novo Banco, which is 75% owned by the US-fund Lone Star and 25% owned by Portugal’s Resolution Fund, has recently come under pressure from the European banking authorities and the Bank of Portugal to decrease its non-performing exposure (NPE) more rapidly.  The successful completion of the transaction, which the bank expects to occur in the third quarter of this year, would lower the bank’s non-performing exposure to 12%. The bank also began to suffer intense criticism when the bank’s president, Antonio Ramalho, recently announced that Novo Banco would request €1.145 billion from the Resolution Fund’s Contingent Capital Mechanism to cover losses with the sale of NPLs incurred in 2018. Novo Banco is currently in the process of receiving non-binding offers for the portfolio. Alantra, a Spanish company that worked with Novo Banco in other similar transactions, is leading the sales operation. Original Story: Economia Online - Alberto Teixeira  
 
ECB Pressures Novo Banco to Further Reduce its Bad Debts
8 March 2019 The European Central Bank (ECB) has stated that it wants Novo Banco to reduce its non-performing loan exposure (NPE) to 10% this year in order to lower its holdings of bad debts to conform to guidelines set by the European Banking Authority. Novo Banco had already submitted a plan for reducing its exposure to 12-13% from its current level of 22.4%, above the level desired by the banking authorities as they tighten the requirements for exposure to non-performing loans. The ECB’s desire to see a more rapid reduction in Novo Banco’s NPE partially explains the speed of the bank’s portfolio sales. Most of the bank’s bad debts came from BES, and the bank is largely protected from losses on the assets by the Resolution Fund (CCA – Contingent Capital Agreement). Original Story: Expresso Summary / Translation: Richard Turner  
 
Cerberus Buys €600-Million Real Estate Portfolio from Santander Totta
7 February 2019 The Cerberus fund acquired a €600-million portfolio of real estate that belonged to Popular Portugal from Santander Totta. The sale generated €50 million in profits for the bank in 2018. The US-fund Cerberus acquired the €600-million real estate portfolio that Santander Totta had put on the block at the end of last year, according to statements by a market source. The sale of the "Tagus Project" was completed in December and helped the bank led by Pedro Castro e Almeida to post profits of €500 million in 2018. Apollo, Bain Capital (which acquired bad debts from the Caixa Geral de Depósitos) and Arrow Global had all been in the race to acquire the portfolio. ECO attempted to contact Santander Totta but received no response before the publication of this article. During the presentation of results, CFO Manuel Preto explained that the portfolio comprised a set of real estate assets that had been transferred to Santander Totta upon its acquisition of Popular Portugal at the end of 2017. "We tried to dispose of these assets very quickly because we think that bank management should be focused on new loans [to boost the economy] instead of managing portfolios that are already adequately provisioned and that add little to the bank's results," he said. Mr Preto added that the sale of the real estate portfolio added about 50 million euros to last year's results, through the release of provisions made for the assets. Santander Totta reported a 14.6% increase in profits to 500 million euros in 2018. It ended the year with a 4% NPL ratio. Because of this, Mr Preto said, the bank is planning on selling any significant portfolios of bad debts in the near future. "The (NPL) ratio is already reasonably low. It is also starting to become difficult finding portfolios that are attractive to investors, who demand some kind of granularity in this type of portfolio," the manager said. As for Cerberus, the US fund also participated in the race for the largest portfolio of NPLs ever sold in Portugal, the "Nata Project." The portfolio comprised 2.15 billion euros of NPLs, which Novo Banco sold to KKR in December. Cerberus also recently acquired the BES Vénétie bank from Novo Banco at the end of last year for about 50 million euros, having lost the race for the Spanish bank Caixa Geral de Depósitos to Abanca. Original Story: Economia Online - Alberto Teixeira Photo: Hugo Amaral / ECO Translation: Richard Turner