Tag: doBank

doBank acquired 85% of Altamira Am

02 January, Il Sole 24 Ore

doBank is aiming at the Southern European market of bad loans and real estate assets. The group reached an agreement to acquire 85% of Altamira Am from the Apollo funds, the Canadian retirement fund and the Abu Dhabi Investment Authority. The interests may reach 100% if the Spanish Santander sells its 15% share.

Altamira manages credits and real estate assets for a total amount of 55 billion euro. The company is present in Spain, Cyprus, Portugal and Greece, and its enterprise value is assessed at 412 million euro. With this operation, which saw Mediobanca as the advisor, doBank has become the leader in Europe concerning credit management and real estate services on behalf of banks and investors, with managed assets for 140 billion and over 2,200 employees.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

doBank is about to conclude the negotiations with Altamira

21 December, Milano Finanza

The negotiations between doBank and Altamira are at an advanced stage. According to El Confidencial, doBank, the financial company operating in NPL management and collection on behalf of banks and companies, is about the close a deal concerning the purchase of the leading Spanish servicer, Altamira, the former platform of Banco Santander. The platform is owned for 85% by funds such as Apollo, CPPIB and ADIA and 15% by Santander.

doBank is allegedly the favourite candidate to acquire the company after that Intrum withdrew from the competition to focus on Solvia, the NPL platform of Banco Sabadell. While the funds are open to selling, it’s still not clear whether Santander will also sell its holdings since Altamira manages a part of its assets. Altamira operates in Portugal, Cyprus and Greece, where doBank has recently won a servicing mandate concerning NPLs for 1.8 billion euro.

In 2017, Altamira had 700 employees and an NPL stock of about 50 billion euro backed by over 82,000 real estate assets. Moreover, it had about 15 long-term clients, including Santander and Sareve (the NPL national fund) representing approximately 30% of its assets under management. Nine billion of the assets under management are located abroad, mainly in Portugal (Oitante, 1.5 billion euro) and Cyprus.

The rumours talk about an offer for 500-550 million euro, although the initial estimate was for 600 million, for a player with assets under management for 55 billion between non-performing loans and real estate assets. As stressed by Equita in its analysis, the estimated purchasing price might be lower than the amounts generally paid for the Italian platforms, although it refers to a more mature market.

As the analysts estimate, “we don’t know the financial data of Altamira, but assuming fees are lower than in Italy, we estimate Altamira might generate at Ebitda of approximately 45 million euro”. At this stage, the leverage will reach the maximum level set in the business plan, namely three times the net debt/Ebitda ratio, or slightly over.

According to the Equita analysts, the acquisition of Altamira might have a strategic relevance since it will allow doBank to the enter the Spanish servicing market (NPLs for over 200 billion between primary and secondary market) with a leading position and to enter interesting countries such as Cyprus and Portugal, without the need to acquire local platforms. Banca Akros adds: “it would be a significant step forward in the doBank’s three-year business plan. It will allow the company to enter primary markets, as Spain and Portugal, re-leveraging the accounts”.

However, Equita warns that “the risks might be very high and the potential synergies with Italian activities very limited”. Equita confirms its hold rating and the target price of 11.60 euro, while the rating by Banca Akros is to buy and a target price of 12.50 euro. The doBank shares reported a -2.21%and are traded at 8.85 euro after the company announced yesterday to have obtained a mandate from Iccrea as a special servicer as well as a master servicer for an NPL portfolio of a book value equal to 2 billion euro, 70% of which secured.

The portfolio is composed of 10 thousand holdings (the average book value is 200 thousand euro). The operation is aligned with growth trend reported by the company already in the first semester of 2018, after having won three mandates for NPL amounting to over 3 billion (with completed operations for 2.7 billion with Banca Agricola Popolare di Ragusa, Carige and Iccrea).

The Equita analysts say that “thanks to this deal, our estimate concerning deals in 2018 equal for over 17 billion is almost achieved”. “The news is definitely positive, as it improves the 2019 outlook, and it shows how the company can successfully meet its targets”.

Source: Milano Finanza

Translator: Cristina Ambrosi

Shortlist for the Banco Bpm NPL

31 July, Milano Finanza

A couple of players will deal with Banco Bpm to define the last piece of the de-risking plan. According to the Milano Finanza, the Board of Directors of the bank led by Giuseppe Castagna will meet on Friday 3rd August regarding its NPL disposal plan. The so-called Project Ace is on the agenda, concerning the revaluation of a portfolio amounting between 3.5 and 9.5 billion. The price differential is rather broad, and it will be reduced in the later phases of the process. In fact, the bank might decide whether to sell only one single portfolio, as it has done so far, or to transfer the management platform too, bringing the nominal total stock close to 10 billion. In conclusion, it will depend on the price investors will bid and on whether the operation will be economically convenient.

After having gathered the non-binding offers, the bank did an initial screening at the beginning of July when the submission of the binding proposals. Among the candidates, there are allegedly six teams: Tpg-Crc-Davidson Kempner-Prelios (assisted by the advisors Mediobanca and Rothschild), DoBank-Fortress (with Citi), Credito Fondiario-Elliott (with Goldman Sachs and Cbre), Varde-Guber, Cerberus (with Lazard and Vitale), and Pimco-Phoenix Asset Management. The predictions say that the first two teams are the favourite to be included in the shortlist, but last-minute changes are not be excluded. What is certain is that the negotiations to define the operation will resume after the summer and will probably conclude during the autumn. Banco Bpm, with the assistance of the advisors Deutsche Bank, Kpmg and Akros, will have to reach a deal to meet the objectives set with the ECB. In this way, the bank will have cleaned up its assets, ready for the 2019 targets.

In the past few months, the group has completed a securitisation with state guarantee (Gacs) for 5 billion assisted by Deutsche Bank, Mediobanca and Akros and with Akros in the role of servicer. The securitisation is the last of a long series of significant transactions recently finalised under the management of Edoardo Lombella (in charge of portfolio disposal). In June 2017, for instance, the bank sold to Algebris the portfolio Project Rainbow for 693 million, composed of secured loans backed by hotels, commercial and residential properties. In December 2017, the bank sold the Sun portfolio, worth 1,8 billion, to J Invest and Hoist Finance.

Source: Milano Finanza

Translator: Cristina Ambrosi

DoBank: good performance on the stock exchange and new business plan

18 June, Milano Finanza

Tomorrow DoBank will present its new 2018-2020 business plan. Today, the shares were in countertrend with the rest of the market, having increased by 1.59% and set at 10.88 euro. The following is what analysts expect from the plan.

Equita, whose rating is “hold” while the target price is 12,2 euro, expects net returns for 230.7 million euro in 2020 (the consensus estimates 235 million), against the 194.9 million of 2017. Equita forecasts a yearly growth of the Ebitda by 14.6%, reaching 105.7 million in 2020 against the 70.1 million in 2017. Concerning net profits, the expected annual growth is composed of 70.5 million in 2020 and 45 million in 2017.

“The presentation should also include the drivers for the growth of returns in the medium-term”, according to Equita. There’s considerable attention for the international expansion plans. The company reminds that in the first quarter of the year, doBank launched its business in Greece through doBank Hellas, even though no servicing contract has been announced so far.

Regarding the management of unlikely to pay, Equita expects that the company to clearly explain the modalities through which it intends entering the Italian UTP market (94 billion at the end of 2017). “We believe that the servicing of UTP might be a great opportunity for servicers. But there must be more transparency regarding their management and the remuneration modalities. According to our calculations, the entrance in the UTP market will generate additional returns for approximately 35 million by 2019 (+15% gross returns)”.

Finally, Equita awaits to know whether the budget will be used for M&A or to pay extraordinary dividends. The analysts conclude that “the identification of the drivers supporting the returns and the medium- and long-term margins is an essential element for the re-rating of the shares”.

Kepler Cheuvreux has also given a “hold” rating with a target price of 13.2 euro for doBank. The experts of the merchant bank expect “positive messages from the Capital Markets Day” and estimate returns for 253 million euro by 2020, with an Ebitda around 104 million and a net profits for 67 million”.

Source: Milano Finanza

Translator: Cristina Ambrosi

 

doBank challenges Intrum

26 May, Milano Finanza

The final touches will come in the next few days. Then the doBank business plan will be ready to be presented on the market. One year from the listing on the stock exchange, the leading company of the bad loans sector guided by Andrea Mangoni is at the centre of a very dynamic market, which might register transactions for 70 billion for 2018. In fact, the banking system has radically changed a paradigm that was valid since a few months ago. Nowadays, rather than managing internally their portfolios, banks prefer to transfer them to solve their problems for good and to comply with the ECB’s firm moral suasion. From this point of view, the recent agreement between Intesa Sanpaolo and Intrum Iustitia has been an example of this trend. In fact, the bank guided by Carlo Messina preferred to outsource the management of the stocks, even though the bank is still keeping a minority quota of the platform to benefit from the future cash flows. The operation has quickly become a reference for the whole market, and many other banks are evaluating to do the same. For instance, Banco Bpm is studying a similar solution as one of the options for the completion of the Ace project, while Bper Banca might do the same. Regardless the results of the internal collections and the capitals, the reason for this trend is that the market’s attention has shifted towards the quality of the assets, plus an NPL ratio over 10% could be penalising. doBank intends taking advantage of this new trend proposing itself as a strategic partner. Mainly because the group has already carried out similar operations: for example, in 2005 Intalfondiario concluded the first deal of this type with Intesa Sanpaolo, which terminated a couple of years ago. Ten years after, there was the agreement with Uccmb, which was acquired by Unicredit in 2015 for about 550 million and then became doBank. That deal was the demonstration of the skill with which the group could move in the sector. In fact, last year the allocation of 44% of doBank earned to Fortress an amount very close to the one paid to Unicredit.

As a consequence, the acquisition of another banking platform (or more than one) will allow the group to make a further leap concerning dimensions compared to the current asset under management for 90 billion. Today, doBank is placed at the top of the Italian chart for servicers, distancing all the other players. This gap shows the fragmentation of the sector that might go towards a significant consolidation in the next years. In fact, aggregation is the only option for the smaller players considering the increasing costs and the shrinking margins. International investors might play a crucial role for this purpose. It’s not by chance that the significant funds started hunting for servicers at the first signs of a bubble of the NPL asset class. It began in 2015 with the private equity fund Lone Star that acquired the Rome-based Caf (the company was then sold to Intrum a couple of months ago), then in 2016 Elliott entered Panfilo Tarantelli’s Credito Fondiario, in 2017 Varde took over 33% of the Brescia-based Guber for 47 million, Arrow Global Group got Zenith Service and Burlington took control of Prelios. Today, among the very few independent servicers that are left, there is Fire from Messina, founded by Sergio Bommarito and guided by Claudio Manetti. In conclusion, international investors will rely more and more on Italian servicers for their investment strategies. Furthermore, it’s not to exclude that operators will unite, even though doBank is not interested in this sort of operations. In fact, the group aims at growing internally, even though new strategies are not to exclude in the future. The business plan that will be presented in London in June will detail such strategy.

According to the rumours, the core business will remain bad loans, but the horizon might widen. More in detail, doBank might focus on unlikely to pay (UTP) which represent an attractive area for the banking system. After having disposed of bad loans, in fact, Italian banks have started carrying out the first operations on UTP, a business that might grow in the next months. Also because, the recent ECB addendum substantially evened out the timing for the collection of the two credit categories, cancelling the distinction.

The second area of focus will be foreign countries. Since the beginning of the year, doBank has been negotiating with the main Greek banks, namely Eurobank, National bank of Greece, Piraeus Bank and Alpha Bank. The banks intend to create a common platform to manage the credits of SMEs with the possibility to expand also in other segments. The agreement is supposed to come shortly to a conclusion and might be only one of the initiatives that the group will undertake on the international markets.

The third focus might be the strengthening of its auxiliary services offered to banks to diversify the origin of the returns, considering the physiological reduction of the new bad loans streams.

Source: Milano Finanza

Translator: Cristina Ambrosi

Banks, three players for the NPL management

07 May, La Repubblica

After an initial phase when banks’ bad loans attracted many specialised operators, three big operators have now consolidated in the sector: DoBank, Cerved and Intrum. They all aim at expanding by buying non-performing loans, even though they differ a lot one another. All together they hold bad loans for a value around 180 billion euro, mostly originated from Italian banks. They’re the big three of credit collection:  DoBank, Intrum and Cerved. Behind them, there is a little army of servicers, namely those companies collecting the money from who has a mortgage or a loan and stopped paying the instalments.

The last arrived in the market is Intrum. Thanks to a remarkable operation carried out together with Intesa Sanpaolo, the company entered the Italian market obtaining NPL for about 30 billion, in addition to the 10 billion it already held. The new company that acquired the Intesa credit management platform along with its 600 employees hasn’t a name yet, it’s owned by 51% by Intrum and by 49% by Intesa. Intrum is the European leading company in the credit services sector, it’s present in 24 countries and has over 8 thousand employees. The company was born as a credit servicer specialised in the collection of unpaid utility bills. In the last few years, Intrum sensed the potential of banks’ bad loans and it acquired the necessary platforms. Antonella Pagano, Intrum Italia managing director, explains: “For instance, in 2010 Intrum concluded together with Santander an operation similar to the one with Intesa Sanpaolo, acquiring the platform of the Spanish bank which remained a minority shareholder”. Intrum aims at working also with other banks in Italy, overcoming the natural suspicion they may have towards whom manages the NPL of the first Italian bank. “We already do that in Spain, granting maximum confidentiality through data segregation”.

However, not all the companies have the same business model. DoBank was born from the merger of Italfondiario and Uccmb (the Unicredit platform sold in 2015 to some Fortress affiliated funds). Nowadays, it’s the leader in the sector with asset under management for 88 billion and over 17 years of experience. DoBank has just finished the integration among the various platforms and is listed on the Stock Exchange since last year. Today, the company pursues new objectives in the field of bad loans. DoBank manages credits on behalf of Unicredit and other leading banks. The substantial difference between the bank and the servicer is that this latter manages the NPL on behalf of others -which are still the owners of those NPL –, the gain is based on the management commissions, fixed as well as variable. When managing NPL portfolios (these are generally sold in Italy at very low prices, between 18% and 29%), the bank deconsolidates them from its financial statement and the gain from the servicer depends on how quick it will be in collecting the credits. The quicker is the collection, the bigger the gain will be. In some cases, DoBank is also the co-investor of the NPL portfolio together with the bank the sold it in order to “align interests”. The price of each portfolio depends on the type of credits it contains the maturity and the presence or not of guarantees. Intrum too manages and acquires NPL. The critics of such models say that there is a conflict of interests in such a model since the servicer might be more motivated in collecting the credits it purchased rather than those that it doesn’t own. However, it’s also true that the banks sell NPL request to servicers precise disposal conditions in their contracts.

Whereas Cerved has a totally different model. Managing 48 billion, it’s a “pure” manager of the NPL that are kept in the banks’ statements. Therefore, there are no conflicting interests since the company earns only if it manages to collect the amounts owed or to sell the collaterals, in most cases real estate. Cerved believes that its nature of “third party” will bring other banks to assign to the company their NPL without the worry of disclosing their information.

There are still NPL between 50 and 60 billion to allocate. Some other bank might decide to sell them. The most interesting opportunity is represented by cooperative banks such as Ubi, Banco Bpm and Bper. All these three banks have credit collection platforms. They might follow Intesa which at first decided to keep its platform for then selling it. It’s clear now that there is a market for servicers since these can manage NPL more efficiently than banks. In the past few days, several servicers contacted Banco Bpm to evaluate the acquisition of its platform managing NPL for 17 billion. Besides the three cooperative banks, other banks that might consider selling their platforms and NPL portfolios are the Italian branches of European groups such as Deutsche Bank, Bnl-Bnp Paribas and Cariparma.

Beneath the big three, there is plenty of servicers. The biggest are Prelios (7.5 billion managed assets), Credito Fondiario, Fbs and Guber Banca (all with 7.4 billion), Holst Finance (6.6 billion), Sistemia (4.9) and Me Credit Solutions (4.1), while international companies dominate the market of NPL management, having multiplied the acquisitions. Who wanted to enter the appealing Italian market bought what it could. Before buying the Intesa platform, Intrum acquired Caf at the end of 2017. In the meantime, Kemper acquired Prelios, Kkr bought Sistemia, Varde Guber Banca, Lone Star Caf, Cerved Credit Management acquired Tarida and Recus as well as the platforms of Credito Valtellinese and Banca Popolare di Bari, Bain Capital bought Harit (now called Aquileia Capital Services), Arrow Parr Credit, Europa Investimenti, Zenith service, Kruk Agecredit. Domenico Torini, Kpmg partner, explains: “In the past few years, the most significant operations have concerned the acquisitions of the banks’ platforms. All the others have been operations for the consolidation of the servicers in order to acquire new expertise or to enter the Italian market in the case of foreign investors”. In fact, servicers vary a lot one another: some collect only utility bills, others work with companies that asked for the agreement among creditors or that declared bankruptcy, some others collect money from developers and real estate leasing companies. Finally, there’s who, like Sistemia, that focuses on a technologic platform for the prompt action in real estate auctions.

This consolidation process isn’t finished yet. It will be when there will be only a few groups left. Servicers were born mainly to manage Italian NPL portfolios acquired by the international funds, earning from the difference between the low purchase cost and the value collected, necessarily higher. The first NPL were sold below 20% of their nominal cost, in other cases over 40%, those of Intesa were sold at 29%. The risk for the investors rises with the price, even though the percentage itself is not very relevant, as it all depends on the quality of the credits included in the portfolio. Guido Lombardo, Credito Fondiario (former Fonspa) chief investment officer, warns that: “Even the investor might be wrong, as it happened in the past. This is the reason why is best practise to bring the company managing the NPL to risk together with the investor. We co-invest. In this way, if we don’t manage to collect, not only we worked for nothing, we also lost money”. Did those who invested in the Italian NPL make a bargain? “We don’t know yet. We’ll see in 5-7 years”. The appointment is for 2023 then.

Source: La Repubblica

Translator: Cristina Ambrosi

DoBank, 11 billion from Mps

15 February, Milano Finanza

DoBank will probably have enough to work on in the next few months. The company owned by Fortress, in fact, is very active in the non-performing loans market. After having closed 2017 with gross assets for 76.7 billion euro (compared to the 80.9 of the previous year), the bank is intending to grow by other 11 billion thanks to several operations in the pipeline. Over the past year, in fact, DoBank signed several agreements for important operations concerning bad loans portfolios: one is with Mps, three with the saving banks of Rimini, San Miniato and Cesena (the Berenice project), and with Rev. The management activity of the portfolios will start in the first quarter of this year: Rev and Berenice will start in February and Mps in March. The group led by Andrea Mangoni might also take other opportunities, as many banks have planned important operations concerning NPLs disposals: Sga (9.6 billion), Banco Bpm (9.5 billion), Rev (9 billion), Bper (4 billion), Credito Valtellinese (2.1 billion) and Ubi (1 billion). Hence, it’s likely that DoBank will take also other projects.

In the meanwhile, the group has closed 2017 with a net income grown by 3% and amounting 194.9 million and net profits of 45 million, growing by 11% compared to the previous year. Especially for what concerns profits from servicing, the core business of the group, amounting to 196.6 million, growing by 3% compared to the 191.8 million of 2016. This result was achieved thanks to “the increased collections as well as a slight increase of the average commissions, two elements that have largely compensated the reduction of the base fee, related to the decrease of the dimensions of the average gross managed portfolio, along with the slight decrease of the transfer compensations”, explains a memo. The data regarding the earnings from the collections is particularly interesting, as it amounts to 1.84 billion, growing by 8% compared to the net earnings for 1.69 billion registered in 2016. Whereas the operating costs have remained substantially stable, amounting to 124.8 million compared to the 124.1 of 2016. The increase in the personnel expenses have increased (+2% in 2017 compared to the previous year) due to the strengthening of the top management and the introduction of the new incentive system after the listing, these expenses are entirely compensated by the savings for the other costs, including the real estate expenses and the other general expenses. The Ebitda has risen to 9%, going from 64.3 to 70.1 million with an ebitda margin of 33%, growing by 2%. While the net financial position is positive with 38.6 million, improving in comparison with the 29.5 million of 2016. According to the memo, the improvement is due “the more effectiveness of the management activity and the capacity of the taking advantage of the improved economic situation”. Earnings for 2017 have represented the 2.4% of the managed assets at the end of the accounting period, increasing significantly by 2.1% compared to 2016. Considering these results, the distributions of the dividends for 0.406 euro per share has been proposed (70% of profits compared to the 65% estimated by the Ceo during the IPO).

During the conference call to present the financial results, Mangoni showed the trend of the sector. Concerning the sale of the NPL management platform by Intesa Sanpaolo and the exclusive negotiation with Intrum Justitia, the Ceo stated that he doesn’t see the operation as a threat, “as Intesa will keep a quota of 49%, it will be difficult for other banks to use this platform for the NPL management”. Mangoni judged positively the deal: “It proofs that banks need to outsource the NPL management rather than manage bad debts internally”.

Source: Milano Finanza

Translator: Cristina Ambrosi

Project Solar, doBank wants all the NPLs of Greece

22 December, Citywire

DoBank aims ta the bad loans of the four main Greek banks: Eurobank, National Bank of Greece, Piraeus Bank and Alpha Bank.

The operation is called “project Solar” and sees the creation of a platform for the management of credits towards SMEs.

DoBank, a Fortress subsidiary guided by Andrea Mangoni, is initially aiming at a 2 billion euro portfolio, but they may reach 5 billion, leveraging the request from the ECB to the Greek banks to get rid of debt.

In fact, the Greek banking system has undergone a deep transformation, with the number of banks gone from 15 to 4 (through 11 different mergers), the cut by one-fifth of their staff and by one-third of the branches. The first profits were already registered in 2016.

In January we’ll know whether the Project Solar may start.

Source: Citywire

Translator: Cristina Ambrosi

Credits for one billion to manage for doBank

20 December, Milano Finanza

The group doBank will be appointed in the role of servicer for the management of bad loans for a gross book value of approximately 1 billion euro. The operation is included the bailout plan of Cassa di Risparmio di Rimini, Cassa di Risparmio di Cesena, and Cassa di Risparmio di San Miniato, known as operation Berenice, carried out by the fund Italian Recovery Fund (Atlante II).

doBank is supposed to start working on the credits in the first quarter of 2018. The appointment of special servicer in the Berenice operation is consistent with the strategic plan and doBank’s plans for expansion.

doBank is a leading independent servicer, operating in credit management, mainly non-performing loans, on behalf of banks and private and public financial institutions, with a managed credit portfolio of  81 billion euro (gross book value), corresponding to over a half of the NPLs externally managed in the Italian independent servicing market and about one-third  of the total volume of NPLs in the same market.

doBank’s gross earnings at the date of 31st December 2016 were equal to 206.2 million euro and were composed for 93% of earnings from servicing activity, for 4% from earnings of auxiliary products and for the remaining 3% of minor banking activities.

doBank’s stocks have dropped below 12.5 euro (-2.7%).

Source: Milano Finanza

Translator: Cristina Ambrosi

Cerved and doBank for the NPL of Mps

17 October, Monitor Immobiliare

doBank has obtained a preliminary agreement to obtain the management as servicer of the 8 billion-euro bad loans within the divestiture and securitisation operation of a portfolio for a value approximately of 26 billion euro altogether from the Mps Group.

The securitisation of the Mps bad loans is one of the biggest operations ever done in Europe. With this assignment, doBank will manage about 30% of the total value of the operation, with more than proportional returns on the total in comparison with the volumes allocation of the portfolio.

The underwriting of the servicing contracts together with the finalisation of the operations as well as the good results of the negotiation between the parts, is expected along with the issuance of the notes of the mentioned securitisation by the end of the year, whereas the doBank is meant to start working on the bad loans by the first quarter of 2018.

Update:

Cerved and doBank have been appointed by Quaestio on behalf of Atlante II Fund, to carry out the special servicing service on the total 21 billion bad loans of Mps. In the meanwhile, Cerved, through its indirect subsidiary Cerved Credit Management, has been identified by the Fund among the subjects to take the special servicer role to manage 13 billion-euro Mps bad loans.

Source: Monitor Immobilire (by J.B.)

Translator: Cristina Ambrosi