Month: April 2013

Banks speed up the sale of non strategic assets in order to reinforce their capital.

Banks have placed the “For sale” sign on most of its assets and businesses. Either to reduce their balance, or to increase the capital base or even to improve their efficiency, financial institutions have speeded up the sale of non strategic businesses during the last few months. And, according to experts, this is only the beginning of a trend which will continue in 2013.

Those institutions that have received financial aid, such as Bankia, Catalunya Banc or NCG Banco, are the most active ones when negotiating disinvestments, as imposed by Brussels. Nevertheless, healthy institutions are also taking the initiative. (…)

There are all kind of different businesses on sale: insurance companies, fund and retirement pensions management companies and deposit companies. They are also studying the sale of more strategic areas for banks such as the recovery services, real estate management platforms or even the segment of credit cards. In the short term, nationalized banks may also transfer network of branches and participated companies.

Banks started to get rid of the insurance business once the crisis started. All institutions have obtained gains with the agreements on insurances or the sale of portfolios. These agreements will allow them to liberate capital, which is absorbed on a greater scale by insurances, facing Basel III.

In other segments, Popular has been one of the most active institutions in Spain. It transferred 51% of its fund management company to Allianz in 2011, it outsourced its business of custody and liquidation of national and international securities to BNP; and has closed the sale  of its recovery services to EOS Group and a portfolio of troubled loans of 1150 million Euros to Lindorff and AnaCap.

That type of business and portfolios is the one with the most agreements during this last year. Santander was the pioneer in this field, transferring its recovery subsidiary, Reintegra, to Lindorff, in 2011. Banesto followed its steps last year when it sold Aktua to Centerbridge.

Now, institutions such as Bankia and CaixaBank want to go ahead transferring their teams specialized in the management and recovery of real estate assets. Bankia Habitat, will be in new hands from May on. Meanwhile, CaixaBank wants to do the same with Servicaixa, according to Bloomberg.

The fund management companies are another non strategic segment, although the sale agreements are still scarce in this sector. One of the last operations, other than the Popular one to Allianz, is the sale of the management company to Liberbank, acquired by Banco Madrid.

Apart from the transfer or outsourcing of businesses and services, experts hope for more operations of strategic assets for institutions, mainly because of the requirements imposed by the troika in order to approve the Spanish financial rescue. Investment banks sources do not dismiss new operations such as the BMN one, which transferred the former Caixa Penedes to Banco Sabadell.

An increase in the sale of participated companies by nationalized and healthy institutions is also expected. La Caixa has already done so, with the sale of 3% of Abertis to OHL. The Catalan savings bank needs to close new disinvestments with the aim of complying with the new requirements from Brussels. (…)

BBVA will pay 1000 million Euros more to the Deposit Guarantee Fund (DGF) for not having invested in the bad bank.

Luis de Guindos, minister of Economy, declared that the DGF might need an amount between 1.500 and 2.000 million Euros in order to acquire the shares of Catalunya Banc and Novagalicia Banco from small investors who received them in exchange for their preferred stocks and subordinated debt.

The amount will be obtained through an extraordinary quota, as the DGF does not have enough funds. 40% of it will be paid in January 2014 and the rest, in seven years according to a calendar that needs to be established.

The distribution of this extraordinary quota among all institutions whose deposits are guaranteed by the DGF will be done, as usual, depending on the quota of calculated deposits of each of the institutions under the guarantee of the fund. The amount will be of three per thousand of those deposits.

Should this extraordinary quota be even, then it would only be necessary to distribute the 2000 million Euros between each institution depending on their quota and that would be the end of it. The problem is that the decree establishes that the committee of the DGF, made up of twelve members, six of which belong to the Bank of Spain while the rest represents the financial institutions, can make important modifications on this distribution.

They may decide whether or not those banks with public aid should participate. This would reduce considerably the number of institutions that need to pay the 2000 million Euros. They may also decide that those smaller institutions, that do not reach a volume of 5.000 million Euros in deposits, only pay half the amount. This would be an important amount for these institutions, but rather small on the total amount.

Finally, the royal decree allows that those institutions which are a part of the bad bank can deduct up to 30% of the total amount transferred to Sareb from the amount they would need to pay. 16 banks are now shareholders of the bad bank, with an investment of 24.706 million Euros. That is, if they are authorized, they could reduce their contribution to the GDF by 741.8 million Euros.

If those who have received public aid are also exempt, the amount to be paid by all others would increase by 440 million Euros. Also, if those who have transferred amounts to Sareb may deduct 30% of this contribution, BBVA will have to contribute with 740 million Euros as it is the only important institution that has not participated in the creation process of Sareb. The three per thousand of its deposits would also need to be added to that amount. In total, more than 1.000 million Euros, that is, more than half of the total quota. (…)

There has been no official reaction from BBVA. Nevertheless, the fact that they will need to contribute with half of the extraordinary quota has been a surprise as they were confident that the Troika would prevent this measure as they would see it as discriminatory.