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Sabadell Reports €2,000M In Additional Revenues From Sale Of 2 Portfolios

26 July 2017 – Voz Pópuli

Banco Sabadell is improving its financial figures. The entity chaired by Josep Oliu has closed several divestments over the last few months that will allow it to report extra revenues of €2,000 million this year.

Through this, it wants to avoid the market from drawing comparisons between it and Popular, as happened with Liberbank before the prohibition against trading short positions was introduced. After a few nervous days for the whole sector, Sabadell’s share price rose by more than 5%, following the express rescue of Popular, and its bearish positions decreased.

The divestments have accelerated in recent weeks, with the sale of two portfolios of doubtful debts and of a reinsurance agreement with Swiss Re, as a result of which it has registered proceeds of almost €700 million.

In terms of its portfolios, Sabadell has signed the transfer of two in the last few days. On the one hand, it has almost completed the sale of Project Gregal, with a volume of €800 million, to three funds. That operation was divided into three sub-portfolios: one containing real estate loans to SMEs (€200 million), which was acquired by D. E. Shaw; another containing non-performing loans to individuals, which has been awarded to Lindorff; and another containing non-performing loans to SMEs, which has yet to be sold and for which Cabot, Intrum and PRA are currently competing, according to financial sources. Market sources estimate that Sabadell will receive between €100 million and €150 million for that operation.

Strategic objectives

In addition to Project Gregal, Sabadell has also signed the sale of €950 million in loans to Oaktree, as part of Project Normandy. That operation has been underway for almost a year but has not been signed until now due to (disagreements regarding) the small print. The US fund has paid around €300 million for that portfolio of loans linked to real estate developments.

With these two operations, Sabadell is pushing ahead with its goal to reduce its balance of problematic assets at a rate of €2,000 million per year, per its announcement during the latest update to its strategic plan.

The sale of its subsidiary in the United States will be more important for its capital (which currently stands at 12%), which was announced in March for a value of $1,025 million, with profits of €450 million. That operation is pending approval from the US administrative authorities, which could be granted this quarter.

The same can be said of the reinsurance of a portfolio of individual life-risk insurance, for which Swiss Re has paid €683 million, resulting in net revenues of €250 million for Sabadell.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake