Month: June 2013

Bankia returns 127 million Euros to Sareb after adjusting the perimeter of the transfer of assets.

The group BFA Bankia has modified the deed of the transfer of assets to the bad bank, reducing the final volume to 22.190,7 million Euros. Bankia and its parent company, Banco Financiero y de Ahorros, have informed the National Share Market Commision about the adjustment made between the institution and Sareb, in order to adjust the deed to the effective volume of the transfer.

The nationalized group, transferred real estate assets to the bad bank for 22.190,7 million Euros, that is, 126,9 million Euros less than initially planned. In fact, Bankia has informed that it has already returned the difference, returning to Sareb bonds received for the corresponding amount.

 

Source: Expansión

The eviction procedures have decreased by 14% in the first quarter.

The eviction procedures started in the Spanish courts in the first quarter of the year reached 21.272, 13,9% less than on the same period of 2012, according to the statistic presented today by the General Council of the Judiciary.

According to the report, that attributes this descent to the approval of the Code of Good Banking Practices, the region with more evictions was Andalusia, that represents 22,5% on the total, followed by Catalonia (21,4%), Valencian region (13,2%) and Madrid (10,1%). It also states that the number of evictions reached 16.521 in the first three months of the year, 15,8% less than in 2012, 10.074 of which (23,3% less) ended positively.

According to the General Council, the causes for this reduction are in the Law with Measures for Procedural Improvement, which enables the handing out of the property to the court, without diverting it to the common services. Also the royal decree-law of Measures to reinforce the protection of mortgage debtors that puts a stop to evictions of first residences of especially vulnerable groups. (…)

Source: Expansión

Catalunya Banc, countdown for a possible rescue.

The Government is finishing off all its contacts with the financial institutions in order to try to sell Catalunya Banc in smaller parts, a solution which seems to be essential in order to avoid a new banking rescue, as informed by financial sources to Europa Press.

These sources establish October as the deadline to decide for or against asking for a new aid from Brussels in order to refinance Spanish banks, which would mean accepting new conditions. Before that date, banks should reclassify the refinanced credits with the new requirements demanded by the Bank of Spain and also, Oliver Wyman will make a new test of the banking assets and the awaited losses in view of the worsening of the economy.

“The Government will need to ask for another banking rescue in October unless it finds a solution for Catalunya Banc”, the sources declare, stressing that the President, Mariano Rajoy, will try out all possibilities. “Rajoy is against the humiliation of having to ask for a second rescue”, they assure.

Sources within the Ministry of Economy and Competitiveness have assured Europa Press that “in no case” are they contemplating the request of more funds from Brussels for Spanish banks. The Government has received 41.300 million Euros for this. The Memorandum of Understanding signed in order to receive this aid expires mid January and they do not contemplate asking for more funds. “There is not a chance for a new extension”, they point out from the Department lead by Luis de Guindos.

The Bank of Spain estimates in 208.206 million Euros the credit portfolio of the whole refinancing and restructuring sector at the end of 2012. Analysts estimate that the sector will have to face additional provisions of around 10.000 million Euros based on the new regulations of the supervisor. The Government considers this quantity acceptable and hopes that institutions will be able to cover any needs of capital through the market. Catalunya Banc will therefore test once again the strength of the financial sector and its advance in the restructuring process.

Sources within the market calculate that the institution, now presided by Carlos Pla, has a deficit of around 3000 million Euros. This amount would include the impact of the new requirements for refinancing, the potential default rate on the SMEs and small sized loans that have not been transferred to Sareb.

In fact, the FROB is trying to place among “healthy” institutions packages of branches of the former Catalan savings bank from its network outside Catalonia. They have started by trying to sell branches in Madrid, although sources point out that the Government has not found any support from investors. “No institution is interested right now in branches in Madrid”, they assure. Sources within Catalunya Banc have informed Europa Press that the process of sale of branches has been started “with no rush” and is at a “preliminary stage”. The investment bank Nomura is establishing the value of the network of branches outside Catalonia and looking for potential investors. (…)

Catalunya Banc agreed with Brussels that it would focus his network of branches in Catalonia from now on until 2016. This was one of the conditions to release the aid of 9084 million Euros to restructure the institution. In any case, the sector hopes that Pla´s management will carry out the adjustments “needed”. The sources urge him to close branches “as soon as possible” and demand a “real” business plan and disinvestments.

The Frob has already cancelled the auction on Catalunya Banc twice due to a lack of competitive offers. The Minister of Economy, Luis de Guindos, has insisted that the former Catalan savings bank will not be sold at a loss. Experts now advise celerity in the process of sale due to the possible depreciation of the institution, which is seeing its market share being reduced month by month.

Source: Expansión

Kutxabank criticizes the Supreme Court´s ruling on the minimum limit clauses.

The president of Kutxabank, Mario Fernández, has declared that the sentence of the Supreme Court on the minimum limit clauses is “absolutely mistaken”.

The president of Kutxabank, Mario Fernández Fernández has pointed out that only 0,1% of its portfolio of mortgages includes this clause, although its subsidiary CajaSur does have an important “volume” of this type of clauses. In an interview with Cadena Ser he has declared that the ruling makes “some very important legal mistakes”.

Also he has pointed out that this ruling is not “binding” for them, as it only “affects the parties in the proceedings” and therefore they would have “no obligation” to comply with it “immediately”. Mario Fernández has pointed out that in these cases, everything depends on the customer “being informed” when signing the mortgage.

 

Source: Expansión

Banks would lose 1137 million Euros without minimum limit clauses in mortgages.

The Supreme Court has cornered those institutions that included minimum limit clauses (they limit the descent of the monthly payment to a certain limit) in their mortgages.

The impact the elimination of these limits would have for the main Spanish banks (BBVA, CaixaBank, Popular ad Sabadell) would cause a reduction of their earnings in 1137 million Euros, according to a report by Credit Suisse that values the effect of the measure in 2014 and 2015.

It would also have an impact on the profit which would range between 8% and 34%, while their interest margin would be penalized from 3% to 12%, depending on the bank.

The Swiss firm has made the calculation based on the portfolio of mortgages with a higher volume than the one declared by some institutions, and therefore the global impact could be lower.

The decision by BBVA, Cajamar and NCG Banco to eliminate these clauses affects nearly half a million customers of the bank presided over by Francisco González. On the other hand, NCG Banco, with half of its credit portfolio with minimum limit clauses, will give 90000 customers very good news. The mortgages with minimum limit clauses represent 49% of the mortgage portfolio of the bank.

On the other hand, Sabadell and Popular, that defend the transparency of their agreements and do not plan to eliminate these clauses, have 12000 and 12700 million Euros, respectively, in this type of mortgages, as confirmed by those institutions.

Bankia has 4000 million Euros (out of a portfolio of 80.000 million Euros), inherited from Caja Segovia and Caja de Canarias. The impact on the results of the group would be of just 40 million Euros in one year.

La Caixa did not grant mortgages with limits, but inherited 13.000 million Euros in plots, from Cívica. (…)

Source: Expansión

Qatari Diar fund buys Hotel W in Barcelona for 200 million Euros.

The owners of Hotel W in Barcelona – OHL, FCC, Comsa-Emte and BCN Godia – came to an agreement with Qatari Diar fund on selling the building for 200 million Euros. (…)

The sale is only awaiting the approval of the Port Authorities of Barcelona (APB) that own the land, and the transaction could be brought to an end within few days.

(…) The hotel, known as “hotel Vela” (Spanish word for sailboat – trans.) due to its form and being situated at the seafront, was opened in October 2009 by the New York chain Starwood (…).

Designed by architect Ricardo Bofill, the building has got 27 floors and 473 rooms, and its construction consumed 200 million Euro investment. (…).

Source: La Vanguardia

BBVA eliminates the minimum limit clause from 426.000 mortgages.

Those affected by the minimum limit in their mortgages, that limits the reduction of the monthly payment if the interest rates falls below a certain level, have reasons to celebrate.

BBVA will stop applying, from the 9th May onwards, the minimum limit clauses to 426.000 mortgages, from a total portfolio of 800.000 loans for the acquisition of a home.

Cajamar will also eliminate this clause and NCG Banco is studying it, according to financial sources.

BBVA´s decision determines that the institution will stop earning around 35 million Euros per month in June, taking the current value of the Euribor at one year as a reference, as informed yesterday by the banks to the national share market commission. The losses “in future months will depend on the evolution of the euribor at one year”, which closed in May at 0,48%, the statement adds. Therefore, if the reference rate for mortgages stayed near the current levels until the end of the year, the institution would stop earning 245 million Euros.

The institution presided over by Francisco González has 530.000 mortgages with this clause, 80% of which are currently being penalized by that limit. If the Euribor continues showing very low levels, 104.000 clients more, the remaining 20% will be freed from this clause, considered abusive by different court rulings. (…)

Source: Expansión

The foreign investors return to search for hotels in Spain.

The first half of 2013 has seen the return of forein investors to the Spanish market, after more than five years of absence. Madrid and Barcelona have seen the investment operations from funds from different European countries. The director of investments of the consulting firm Aguirre Newman in Barcelona, Xavier Güell, assures that “he has met with more international funds in the last four months than in the last four years”.

Apart from the announced return of foreign buyers, one of the main novelties of this first half of the year has been the return of the interest on the hotel segment. According to Güell, in Barcelona, more than 70% of the received investment enquiries are in the hotels sector.

The investors, which fled this segment in 2007 due to the fall of prices and the hotel occupancy rate after the price boom of previous years, have returned. They consider that the great Spanish owners (banks and institutions) have had enough time to “embrace the important losses they will have to assume when selling their assets”, Güell declares.

On the other hand, the growth of international tourism in great cities such as Barcelona, along with the recovery of room prices and the occupancy rate, are encouraging investors and operators. The national and international hotel chains bid again to take on the operation of the better located hotels, another factor to convince investors.

Despite the optimism generated by the arrival of international investors, from the investment department of Aguirre Newman they demand caution. “If these funds start to position offers on assets and these are not accepted, they will leave”, Güell declares.

Source: Expansión

One out of every five luxury homes is acquired by a non resident foreigner.

2,2% of the sales of homes in 2012 (12.016 operations) were of properties with a value over 500.000 Euros, according to figures from public notaries. 2366 homes were acquired by non resident foreigners, that is, one out of every five luxury homes sold in Spain are acquired by this type of investors.

One of the measures of the Law for Entrepreneurs approved by the cabinet meeting at the end of May included the granting of the permanent residence to those foreigners acquiring a property for more than 500.000 Euros.

Carlos Smerdou, managing director of Foro Consultores, believes that Russian and South American citizens with a high purchasing power are the foreigners that will benefit the most of this measure. Although Chinese citizens are a market with possibilities, the volume of transactions is still quite low.

These investors look for big properties by the sea. They value features such as location, privacy and services such as security and good transport connections. The number of foreigners that look for a second home in the best areas of the big Spanish cities is also increasing.

Souce: El Idealista

Sareb finally lowers prices of properties in order to invigorate the Spanish real estate market.

The bad bank (Sareb) has had to admit that the market was not ready to pay the prices it was asking for its properties. In view of the worrying pace of sales since its creation and the possibility of having to carry out a capital extension, its president, Belén Romana, has decided to eliminate the surcharge of 25% on the transfer price that it was currently asking from the institutions that commercialize them, according to sources aware of the situation. It will therefore allow the prices to fall down to market levels, as long as these stay over the transfer price; that is, it will not sell at loss, which can invigorate the Spanish real estate market once and for all.

Initially, Romana´s team stressed their intention of getting the best possible price for the properties in order to attain the objective of generating a profitability of an annual 15% for its shareholders (the FROB and the main banks, except BBVA). That is the reason for this surcharge of 25% and for offering incentives to the transferring institutions for selling at even higher prices, as these are the ones commercializing them (Bankia, CatalunyaBanc, NovaGalicia, Banco Valencia, BMN, Liberbank, Ceiss and Caja3). Romana assumed that the big discounts applied to the transfer of properties (an average 65%, 54% of finished properties) would allow the market to absorb this surcharge. This policy made properties in the hands of Sareb more expensive than when they belonged to the corresponding savings bank.

Nevertheless, this policy has been a failure, with sales of only 550 properties since February, very far from the objective for 2013, established at 7528. The crisis is too deep and those prices were still too high for any person willing to buy. In fact, one of the sources assures that most sales are for properties between 50.000-60.000 Euros, that is, the cheapest ones. “You can apply very high margins, but if you do not sell anything, the margin is zero. It is better to lower the margins and sell, even though the profitability per unit might be low. At least you obtain a profit”, another source explains. That is the philosophy that will be applied by the bad bank from now on.

This surcharge of 25% also had the intention of “providing the managers at Sareb the tranquility that no one was going to accuse them of selling their assets at a loss if they obtained that margin”, according to a third source. The disappearance of the 25% eliminates that safety net and therefore Romana has taken two measures: to establish the transfer price as the limit for the descent of prices, that is, to ban the sale at a loss, and to ask for two market studies for each sale, one from the commercializing institution and another one from an independent company, in order to have the highest assurance possible that the price is the right one.

Real estate experts consulted by El Confidencial consider that this decision could provide the final drive to end the adjustment of the Spanish real estate market with a descent of prices to realistic levels, which banks have tried to avoid until now.(…)

The financing agreements signed by Sareb with some financial institutions so that these will award mortgages to those families that wish to buy homes from the bad bank will also contribute to this. The first of these agreements will be signed today with Banco Santander that launched last week the “Supermortgage Sareb-Santander” for first residences, up to 30 years, with a financing percentage of up to 80% of the valuation amount and at Euribor+2,25%.

(…) Precisely the shareholding banks – and competitors – of Sareb were the ones to oppose the collapse of the market and the fact that this would oblige them to lower the prices of their own properties. In fact, they tried to reduce as much as possible the discount applied in the transfer of from the nationalized institutions, and as it finally was rather high, they tried to counteract this with a higher minimum price. Also, the paralysis of the bad bank was allowing them to get rid of their own properties, which is their priority. Now they will have to assume that reduction of prices and that properties within Sareb start being sold.

(…) This turn of 180 degrees in the comercial policy of Sareb and the impact it will have on its margins might force it to revise its business plan in order to reduce its profitability targets to more realistic levels, although for the moment this matter has not been brought up. The waiver to its initial approach takes place just when the first institutional operation is at its peak, the so called project bull, valued at 220 million Euros. This operation has been criticized because Romana had nearly closed it  and decided to pull out in order to set out an auction and try to increase the price, which might turn the whole operation into a failure.

Source: El Confidencial