Bankia Starts Off With the Sale of RE Encumbrance

27/05/2014 – Expansion

Bankia wishes to shed the remaining encumbranced rel estate dragging along in its balance sheets after the bank transferred soured assets to Sareb. The nationalized entity started negotiations with large international funds on selling a part of the €400 million in developer loans and the bank´s lingering exposure to subsidized houses.

To achieve that, Bankia ran two operations: the Sky Project including €430 million in developer loans and repossessed assets (advised by PwC) and the Screen Project including 20 shares in subsidized housing developers (N+1). The first one´s teaser was distributed last week and a great part of the portfolio contains sub- and non-performing credits. In turn, the “Screen” contains between 20%-30% minority stakes in such companies as Gestecam, Pinarcam or Inmo-CAM, inherited by Bankia from savings banks. Some of the firms have their loans outstanding, but many have already declared insolvency.

At the end of 2012, the bank transferred huge load of its toxic assets (€22.3 billion worth) to the bad bank, Sareb, but obviously that was not the entirety of its soured real estate. It still owns a gross €7.7 billion in foreclosures and developer loans (2.5% of the total).

The operation appears exceptional in the Spanish real estate sector as until now none of the big groups has sold a credit portfolio to foreign funds. BBVA and Sabadell put up for sale asset lots in 2013, containing between 800 and 1000 houses. By now, only Eurohypo has shed its loans, while Catalunya Banc´s credit sale is still under process.

Also, until now banks used to sell through retail channel, one property by one, but the time has come for them to shed the repossessed assets in packages to funds.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE