Category: NPL & REO

Bain Submits Highest Bid For Liberbank’s Real Estate

10 October 2017 – Expansión

One of the main elements of the strategic plan launched by Liberbank to rebuild its financial health is entering the home stretch. The bank has now received offers from all three of the suitors who have reached the final phase of the sale of the portfolio of real estate assets worth €800 million. And, according to financial sources, the bid from the US fund Bain is the highest. But, Bain is not alone. KKR and Blackstone have also submitted binding offers, however, the cheque that the former is willing to sign is larger than those of the others, add the same sources.

Nevertheless, that does not mean that Bain is going to win Liberbank’s open bid. In the final evaluation of the offers, the perimeter that each bid defines (the portfolio primarily comprises homes, but also includes some land) will weigh as heavily as the financing that is going to be used and the tax implications. All of this could mean that the quality of the bids varies significantly, as well as the impact that one or another may have for the results of Liberbank.

In addition, market sources point out that from the date that the offers were submitted until the date exclusive negotiations begin with one of the candidates, last minute movements may arise that tip the balance one way or another.

All of this despite the fact that the calendar proposed by Liberbank does not allow for much time for the bids to be revised or for the processes to be delayed. The objective of the bank is to announce the principle of an agreement with one of the three funds that have submitted offers “imminently”, according to financial sources. And they consider that this is possible because all three of the proposals are sufficiently adequate to reach an agreement.

Capital increase

Liberbank’s intention is to announce the sale of the real estate portfolio before or during its upcoming capital increase, through which it hopes to raise €500 million from its shareholders. It plans to use the funds raised to improve the coverage levels for its non-performing assets, increasing them to almost 50% (still slightly below the average in the sector, which stands at 52%), as well as to strengthen its capital.

Liberbank’s wish is that its shareholders will participate in the capital increase safe in the knowledge that the bank has released €800 million in toxic assets, which will no longer weigh down on its balance sheet. The General Shareholders’ Meeting was due to approve the capital increase on Monday (yesterday) and the objective is that the operation will last 15 days, starting as soon as the legal processes allow.

Liberbank’s main shareholders have committed to participating in the capital increase, which means that Oceanwood, Aivilo Spain and Corporación Masaveu (owners of 12.6%, 7.4% and 5% of the share capital, respectively) will maintain their respective stakes.

The capital increase is the most important element of Liberbank’s plan to convince the markets of its financial solvency, but it is not the only one. The transfer of the real estate portfolio plays an important role, as did the sale of its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. That company, which is owned by the fund Cerberus, has taken over the exclusive management of the foreclosed assets of Liberbank and its subsidiaries for a period of seven years.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Liberbank Finalises Property Sale To Ensure Success Of Capital Increase

4 October 2017 – Cinco Días

Liberbank does not want to follow in the footsteps of Popular and is taking firm strides to avoid that fate. Its focus now is on shaking off the property that it still holds following the crisis, in order to project the image in the market that it has cleaned up its books and to ensure the success of its upcoming capital increase. In this way, the entity is finalising the sale of a large part of its portfolio of foreclosed assets this week, in parallel to the capital increase, which its General Shareholders’ Meeting is expected to approve on 9 October.

The entity led by Manuel Menéndez is working against the clock to ensure its independence. The CNMV has given it until 30 November to extend, for the third time, a veto on short positions that it imposed in June, a few days after Popular’s future was resolved. Sources close to the operation expect the first stage (the sale of a portfolio worth €800 million) to be closed this week. Or within 15 days, at the latest, since in that case, it would be performed in parallel to the start of the capital increase.

Liberbank received the first binding offers at the beginning of last week. And from those, it has selected three funds: KKR, Bain and Cerberus. The latter is the firm that acquired the bank’s real estate subsidiary, Mihabitans, in the summer, through Haya Real Estate. It spent €85 million on that purchase. The market described the operation as a “success” and uses it as an example for the upcoming sale of the toxic property.

Haya is exclusively managing the current foreclosed real estate assets on Liberbank’s balance sheet, as well as any future foreclosed real estate assets that end up being incorporated onto the bank’s overall balance sheet or onto those of any of its real estate subsidiaries. According to the accounts for the first half of the year, Liberbank held €3,115 million in foreclosed assets on its balance sheet, with a provision coverage ratio of 40%. Of those, €1,741 million are finished homes, €1,162 million are plots of land, €480 million are homes under construction and €402 million are offices and warehouses.

This new sale of foreclosed assets, dubbed ‘Operación Invictus’, will be closed for a price of around €400 million. Although the book value of the real estate assets in the portfolio is €800 million, the sale will be closed at a discount of at least 50%. Santander closed the sale of 51% of Popular’s property to Blackstone at a discount of 66%.

With the aim of wiping out the losses that this sale will generate and of getting rid of a large part of its real estate portfolio, once and for all, the Board of Directors of Liberbank proposed a capital increase on 6 September, which they are now trying to safeguard. The bank hopes to raise €500 million through the operation. The objective is for the bank’s default ratio to amount to 3.5% by 2019 and for the coverage ratio on its non-performing assets (doubtful loans and foreclosed assets) to rise to around 50%. At the end of June, Liberbank recorded figures of 11.3% and 40% for these ratios, respectively.

With a balance sheet of €40,000 million, Liberbank is the smallest entity of those supervised by the ECB, together with Banco Crédito Social Cooperativo, the parent company of Cajamar. One of Liberbank’s other missions is to increase its return on equity (ROE) to 8% by 2020, compared with the figure of 2.7% recorded during the first half of this year. It is the second time that the bank has increased its share capital since it started trading on the stock market in 2013. The previous capital increase, in May 2014, saw it raise almost €500 million.

Then, the bank responsible for coordinating the operation was Deutsche Bank; now it is being managed by Citi. Last time, the injection of fresh funds allowed the entity to early repay €124 million that the FROB (Fund for Orderly Bank Restructuring or ‘Fondo de Reestructuración Ordenada Bancaria’) had injected it with; to strength its top-tier capital ratio to more than 10%, as if the Basel III requirements were completely applicable; and to bring forward the payment of dividends to its shareholders.

Original story: Cinco Días (by Álvaro Bayón and Pablo M. Simón)

Translation: Carmel Drake

Spain’s Banks Prepare To Sell RE Portfolios Worth €6,000M

2 October 2017 – Cinco Días

Spain’s banks are reducing their exposure to the real estate sector, step by step, under pressure from the European Central Bank and the Bank of Spain. Five entities plus Sareb are currently preparing portfolios to divest some of their properties, worth almost €6,000 million in total.

Most of the portfolios include doubtful loans or NPLs (non-performing loans) although in some cases, they also include real estate assets, most of which have been foreclosed.

After selling Popular’s assets to Blackstone, Santander is now preparing to sell a portfolio, dubbed Titán by the entity chaired by Ana Botín, through the platform Altamira that it shares with Apollo. The portfolio is worth around €400 million, according to sources familiar with the process, and is being structured as an “online shop window”, open to all potential buyers. The bank received an enormous boost in August with the sale of 51% of Popular’s real estate (primarily NPLs and foreclosed assets), which the market saw as an agile and firm response following the purchase of Popular.

Meanwhile, BBVA is managing so-called Project Sena, involving the sale of a portion of Anida to Cerberus for €400 million. Nevertheless, the market considers that the bank may end up getting rid of the entire Anida business. The bank submitted a statement to the CNMV on Thursday confirming that “it is holding conversations with Cerberus Capital”, although it made clear that no agreement has been reached yet. The nominal value of that portfolio of properties amounts to around €1,100 million. The operation follows in the footsteps of the portfolio known as Jaipur, purchased by the same fund in July.

Caixabank is also preparing two other portfolios. The first, known as Tribeca, amounting to €500 million, will come onto the market within the next few days and will mainly comprise residential assets. The second, known as Egeo, for €660 million, comprises €440 million of unsecured loans and €220 million secured by a mix of real estate assets. The entity expects to receive binding offers very soon, according to market sources.

One of the largest projects on the market has been launched by Sabadell; it is known as Voyager and amounts to €800 million. It contains some problem loans to property developers and the remainder corresponds to other sectors, such as hotels. This portfolio is almost a second part of the project known as Traveller, which the entity sold recently to Bain. The bank is expecting to receive offers in October and wants to close the process in December, according to sources familiar with the process.

Liberbank is also preparing another portfolio, containing non-performing loans, known as Invictus, with a value of €700 million, of which 50% relates to residential.

Finally, Sareb has already put a portfolio called Inés on the market, amounting to almost €500 million, which is in its closing phase. And the so-called bad bank is now preparing its first online loan sales project, initially dubbed Dubai, containing around €400 million. Moreover, the market is also expecting it to launch the sale of another portfolio amounting to €300 million, named Tambo, within the next few days (…).

Although the banks have been criticised for the slow rate of reduction of their real estate portfolios, experts indicate that they are now operating at an acceptable cruising speed (…).

The potential buyers of these portfolios (…) include Apollo, Oaktree, Bain, Cerberus, Blackstone, Lone Star, Castlelake, Värde Partners, Lindorff, TPG and Goldman Sachs.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Sareb Creates A Portal To Sell €3,000M In Loans

29 September 2017 – Expansión

Sareb, the company in charge of liquidating the real estate portfolio of the nine savings banks rescued by the State, is seeking to streamline this process through an online channel aimed at institutional players only. The objective is to market more than €3,000 million in delinquent loans through the channel in 2018 alone, as the entity revealed yesterday at a conference with investors organised by SmithNovack in London.

With this portal, Sareb is seeking to not only enhance the transparency of these types of operations but also open up a new channel for smaller investors to be able to access the market. Ignacio Meylán, Director of Institutional Sales at Sareb, said that this initiative forms part of the innovation efforts being undertaken by the company, which is owned 45% by the State and 55% by private investors.

Milestones

During a preliminary pilot phase, the company invited around thirty investors to access a selection of loans, worth around €400 million, in such a way that they are able to submit bids on a loan-by-loan basis.

Meylán explained yesterday that the investors who have registered on the platform will have the opportunity to study the documentation and information relating to each loan, and then formulate their bids in limited and differentiated time periods.

Sareb is expecting to receive bids during the first half of October. The ultimate objective is to expand the core group of investors interested in these assets and, further down the line, take these types of products to local investors interested in acquiring the properties, both residential and other, that secure these loans.

Next year, the bad bank plans to launch six sales processes through this online channel. Each one will include loans worth at least €500 million, and so, it will end up putting a minimum of €3,000 million in toxic assets on the market in a single year.

Portfolios

In addition to this initiative, Sareb has just placed Portfolio Inés on the radars of the opportunistic funds. The portfolio comprises delinquent loans with a nominal value of €500 million. The entity hopes to close the transaction in October. The bad bank is also working on the launch of another portfolio, called Tambo, whose volume amounts to between €250 million and €300 million. The final quarter of the year is typically the most active for divestments of this kind.

The European authorities calculate that Europe’s financial entities hold almost €1 billion (€1,000,000,000,000) in doubtful loans on their balance sheets and that they are making their viability difficult in many cases.

A new record will be set in this market this year, since the start of the crisis, due to the Popular operation, the largest in the history of Spain, which was awarded to Blackstone.

Original story: Expansión

Translation: Carmel Drake

Cerberus Wants To Buy Anida & A €4,000M Portfolio From BBVA

29 September 2017 – Expansión

BBVA is taking new steps to deconsolidate its real estate risk. The entity is holding exclusive negotiations with the US fund Cerberus to sell it a majority stake in its real estate manager, Anida.

Financial sources explain that the fund may also be interested in acquiring around €4,000 million in foreclosed assets and doubtful real estate loans from the bank.

BBVA’s real estate activity, which centres around Anida, comprises two branches. On the one hand, the manager is in charge of administration. On the other hand, it is responsible for the real estate assets, be they foreclosed properties or loans to property developers. BBVA’s gross exposure to property amounts to €20,190 million, according to the latest available data. The entity has a coverage level of 57%, which reduces its net risk in terms of the real estate sector to €8,760 million.

In a relevant fact sent to Spain’s National Securities Market Commission (CNMV), BBVA reported that it is holding conversations with Cerberus (…). “At this time, it is not possible to determine whether the conversations will end in an agreement or not, or what the terms and conditions of such an agreement, were it to be reached, might be”, said the bank.

Similar to Santander

According to sources, the intention of Cerberus is to acquire a majority stake in the real estate company, similar to the agreement that Santander reached with Blackstone to deconsolidate the real estate risk of Popular. Hours after Brussels authorised the purchase of until then the sixth largest Spanish bank by assets, Santander sold Blackstone a 51% stake in the company to offload its problem assets with a gross value of €30,000 million. That was the largest ever real estate operation in Spain.

If the negotiations with Cerberus prove fruitful, BBVA would follow the template established by Santander. Some sources indicate that Cerberus has decided to try its hardest to buy Anida after not making it past the first round in the bid for Popular’s toxic real estate. In fact, the same sources say that the CEO of Cerberus, John Snow, travelled to Madrid a few weeks ago to meet with BBVA’s President, Francisco González.

Negotiations

The negotiations, with Cerberus as the only interlocutor, are very advanced, say sources in the sector. It is expected that the sale of the majority stake in Anida and of property by BBVA could be completed within the next few weeks.

BBVA is being advised by the law firm Clifford Chance and by a team from the consultancy firm PwC. Meanwhile, Linklaters is advising the US fund, which has also hired JLL for the negotiations.

BBVA is one of a handful of banks that have retained full control over their real estate businesses. During the crisis, several entities sold their management companies to specialist funds to generate profits with which to strengthen their businesses and accelerate the divestment of problem assets. Only Kutxabank (to Lone Star) and Santander (with the transfer of Popular’s business to Blackstone) have managed to close block sales of their management arms and asset portfolios.

Original story: Expansión (by R. Ruiz & R. Sampedro)

Translation: Carmel Drake

Bain & KKR In Final Round To Acquire Liberbank’s RE Portfolio

22 September 2017 – Expansión

Liberbank is on the verge of closing the sale of a portfolio of real estate assets worth €800 million. The funds Bain and KKR are the finalists in the process, according to financial sources in the know. There may also be a third finalist in the running, which could be any one of Apollo, Blackstone and Lone Star.

These last three funds approached Liberbank during the initial phase to express their interest in the portfolio of real estate assets for sale, according to sources close to the operation. The funds will have already had access to the virtual data room to find out more details about the assets for sale.

As is usual for this type of real estate operation, they would have also performed the corresponding due diligence. The interest parties signed confidentiality agreements during the first few weeks of August.

The sources specify that Liberbank will close the binding offer phase in the last week of September, most likely on Friday 29.

Development of land

Liberbank is willing to offer favourable conditions to those funds interested in developing the land included in the portfolio, according to sources familiar with the operation, which has been baptised as Project Invictus by Alantra. An incentive for the sale in light of the good times that the Spanish real estate sector is enjoying, which is in the middle of a growth spurt.

The objective of the bank is to divest this batch of property, mostly homes, during the month of October, at the same time as it undertakes a capital increase, amounting to €500 million, which it plans to launch on 9 October. The capital increase, which has preferential subscription rights, is expected to be approved by the Extraordinary General Shareholders’ Meeting on that date.

At the end of July, Liberbank engaged Alantra to coordinate the sale of a package of 9,000 real estate assets, worth €1,200 million. But that firm has reduced the sale perimeter to a batch worth just over €800 million.

The entity is being forced to clear up the uncertainty over the health of its balance sheet. The bank’s high real estate exposure led to doubts in the market following the resolution of Popular’s future on the morning of 7 June. Its stock of non-performing assets accounts for 22% of its balance sheet, one of the highest levels in the sector.

New strategy

Until then, Liberbank had been selling its real estate assets to individuals above all, and it was even generating profits in some cases. The sale of the real estate portfolio worth more than €800 million to one of the major funds will represent a change of strategy to accelerate the reduction of the entity’s real estate exposure.

But the speed of getting rid of this real estate could come at the expense of its financial results. Operations with opportunistic funds are typically signed at a loss, and so sources at the bank have not ruled out the possibility that this strategy will see Liberbank record losses this year. During the first quarter of the year, the most recent accounts published in the market, Liberbank earned 8% less than during the same period in 2016. The entity thinks that the pure banking business, the interest margin, bottomed out in June, when it dipped by 11%.

Real estate subsidiary

In August, the bank led by Manuel Menéndez started its cleanup plans. It sold its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. The company specialising in the provision of management services for financial and real estate assets for entities and funds then become a partner of the bank for the next seven years.

Liberbank, the fruit of the integration between Cajastur, Caja Extremadura, Caja Cantabria and Caja Castilla-La Mancha (CCM), has been facing the rumour of a takeover for several months. The entity’s share price is trading at 0.29% of its book value (..).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Cerberus In Exclusive Negotiations With BBVA To Acquire €2,000M Portfolio

22 September 2017 – El Confidencial

The operation in question is called Project Sena and it is the most important portfolio that BBVA has put on the market to date. With a volume of toxic real estate assets worth €2,000 million, primarily comprising NPLs backed by residential collateral, the entity chaired by Francisco González is holding exclusive conversations with Cerberus, according to several sources in the know. Both the bank and the fund have declined to comment.

Nevertheless, the US fund’s appetite goes much further and extends to include the real estate company Anida, which could end up forming part of the transaction as well. That would result in the second largest real estate divestment to be undertaken by a Spanish entity this year, following the sale of €30,000 million in toxic assets agreed between the new Santander-Popular and Blackstone.

The negotiations between Cerberus and BBVA date back to last summer and are currently at a critical point, in terms of tilting the balance one way or the other. Options on the table include Cerberus acquiring Sena on its own, adding Anida into the mix, or acquiring the former and entering the process to compete for the latter, a decision that could be taken at the next meeting between the entity’s Board of Directors.

As El Confidencial revealed, the idea has been floated at La Vela (BBVA’s headquarters in Madrid) of selling Anida to accelerate the real estate unblocking that the Bank of Spain itself is encouraging all the entities to undertake. In fact, BBVA has engaged PwC to advise it on the operation, and it is open to receiving different offers.

In its favour, Cerberus has the advantage of being in pole position to acquire Sena, a card that it wants to play in its favour to also bid for Anida. Nevertheless, other investment giants, such as Lone Star and Apollo, may also be interested in acquiring the real estate firm, a giant with gross assets of more than €5,000 million and the heir, along with others, of the former fund BBVA Propiedad, which the bank practically rescued at the end of 2008, when the first signs of the crisis emerged.

The net real estate exposure on BBVA’s balance sheet amounts to €8,750 million, according to the bank’s most recent half-yearly accounts, thanks to high coverage levels, which amount to 57% on average, one of the most conservative figures in the sector.

With a strategy clearly aimed at divesting real estate, in the last year, BBVA has undertaken several major operations, such as the sale of its Boston and Buffalo portfolios, the transfer of 1,500 homes to Testa, whose gross value amounts to €485 million and the transfer of land worth €431 million to Metrovacesa. Moreover, alongside Santander, BBVA is a shareholder of Merlin Properties, the largest Socimi in Spain.

After all these movements, the largest pawn currently in play is Anida, which also includes a property developer division, Anida Desarrollos Inmobiliarios, and several subsidiaries that the bank has been gathering up under the same umbrella, such as Anida Operaciones Singulares and subsidiaries in Mexico and Portugal.

In theory, the overseas units would be left outside of the real estate company sales process that is currently on the table, an operation whose final outcome is regarded in the market with as much expectation as concern, given that in the past, the entity has received several expressions of interest for Anida that have never ended up materialising.

But now the panorama has changed, given that the operation between Santander and Blackstone has put pressure on the rest of the sector to make similar moves, and the entities are increasingly more inclined to accelerate the divestment of their real estate.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The Banks & Rifá Negotiate Future Of Gran Hotel Almería

7 September 2017 – La Voz de Almería

The future of the Gran Hotel Almería, the most iconic hotel in the city, which has been closed for almost three years, has been in the hands of a US investment fund since August.

The fund in question is Blackstone, the financial group chaired in Spain by Claudio Boada, which, based on a decision by Banco Santander, has been awarded the entire real estate portfolio that it inherited from Banco Popular, including Aliseda. The portfolio contains, amongst others, the legendary Almería hotel, which has housed many stars from the spaghetti westerns, amongst others.

The portfolio sold to the fund by Ana Botín includes 100% of the sales platform that it received from Popular just a few months ago. The ownership of Aliseda will now be shared between Blackstone (51%) and Santander (49%), in a deal that saw Botín’s bank receive €5,000 million from its new North American partner. Previously, Santander had purchased that stake from the private equity funds Värde Partners and Kennedy Wilson Holdings.

Altogether, the properties transferred – including the Gran Hotel Almería – have a book value of €30,000 million, which is whereby removed from Banco Popular’s balance sheet. The portfolio contains a range of assets from retail premises to homes, industrial warehouses, hotels and plots of land, the majority of which are located in Andalucía.

Miguel Rifá, the Tax Authorities’ largest debtor in Almería, with an overdue balance of €27.5 million, is still the official owner of the Gran Hotel. The property has remained closed for more than two years, during which time Banco Popular decided not to execute the embargo order because, according to financial sources, it did not have a clear project or a solvent buyer (…).

Aliseda spokesman

A spokesman for Aliseda in Madrid declared yesterday to La Voz de Almería that “the Gran Hotel Almería file is still with the loan management department; it is no longer on the balance sheet of Banco Popular; and negotiations are being held with the owner to find a solution for the property”.

All indications are that the role of Blackstone is going to be key over the next few months if the Gran Hotel Almería is to be unraveled from this financial web in which the establishment is immersed. Stars of film and music have stayed there including Sergio Leone, Harrison Ford, Claudia Cardinale, Steven Spielberg, Brigitte Bardot and Ringo Starr.

Santander’s aim is for the weight of Popular’s real estate ballast to be insignificant within two years. Blackstone has extensive experience in Spain in the management of delinquent mortgages.

In 2014, it was awarded a portfolio containing 40,000 contracts by Catalunya Caixa. On 3 December 2012, Miguel Rifá filed for voluntary creditor bankruptcy for the companies Hotel Almería S.L.U., Predios del Sureste and Vosges due to insolvency. Nevertheless, he excluded the Gran Hotel Almería asset from that procedure, of which Banco Popular was the principal creditor.

The combined debt of the Miguel Rifá’s bankrupt companies amounts to €54 million.

Original story: La Voz de Almería (by Manuel León)

Translation: Carmel Drake

Fortress Unwinds Its Final Positions In Spain

7 September 2017 – Voz Pópuli

Fortress has definitively closed a chapter in its history in Spain. The US vulture fund, regarded as one of the most aggressive in the world, has launched two operations in the market through which it is looking to offload its final positions in the Spanish financial sector.

The two deals in question are Project San Siro and Project Baresi. In total, they comprise paid and unpaid loans worth around €300 million, according to financial sources consulted by Vozpópuli. The candidates to buy these loan packages include other opportunistic funds.

The two projects essentially comprise the final dregs of the portfolio that Fortress holds in the Spanish banking sector: loans from Santander, Barclays España (now part of CaixaBank) and Lico Leasing, the former finance company of the savings banks that Fortress purchased at the height of the crisis.

The US fund, led in Spain by the banker José María Cava, was one of the first to enter the financial sector at a time when the lack of trust at the international level was at its peak. It was between 2010 and 2011, when the first interventions of the savings banks began and several cold mergers were carried out, which gave rise to groups such as Bankia.

Critical time

Fortress completed its acquisition of a portfolio from Santander in 2012, just before the rescue of the finance sector. In that deal, Fortress purchased €1,000 million in consumer credits from the group chaired by Ana Botín.

A year later, the US fund announced the purchase of Lico Leasing. That was Fortress’ last major operation in Spain, which broke down just two years later. The fund took a long time to obtain authorisation from the Bank of Spain to approve that acquisition, and so by the time it did receive it, the credit tap had been reopened and so Lico arrived late to the recoveries sector.

For that reason, Fortress decided to close this business and its other financial commitments in Spain. First, it sold one of its recoveries platforms (Paratus) to Elliott and Cabot. Next, it sold Geslico to Axactor. And in terms of the other portfolios (Lico, Santander, and Barclays), it let some of them mature and the remainder is what is now being put up for sale.

It also leaves behind other possible opportunities that the fund considered, such as its failed entry into the share capital of Sareb and of other savings banks, with which it was unable to reach an agreement due to the significant price differences. Fortress is now more focused on other business niches in Spain and most notably in the Italian market, where it purchased, together with Pimco, the largest portfolio of loans, worth €17,000 million, from Unicredit last year. Given its profile, the Spanish banking sector will become the focus of Fortress once again when the next crisis hits.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Liberbank To Increase Capital By €500M To Reduce RE Portfolio

7 September 2017 – RTVE

The financial institution Liberbank is going to increase its share capital by €500 million to “accelerate” the reduction in its real estate portfolio and improve its profitability. The bank, which resulted from the merger between Cajastur-Banco CCM, Caja Cantabria and Caja Extremadura, has set itself the objective of divesting its real estate and doubtful assets, amounting to €800 million, before the end of the year, according to a note submitted to Spain’s National Securities and Exchange Commission (CNMV) on Wednesday.

Liberbank has announced this operation as the prohibition period for the short selling of its shares is due to come to an end. The ban was imposed by the CNMV after naysayers set their sights on the entity following the intervention of Banco Popular and its subsequent purchase by Santander.

On 12 June, the National Securities and Exchange Commission initially established a trading restriction lasting one month, after Liberbank’s share price fell by 40% in just one week, due to the effect of Popular. It then extended the ban for two more months, until 12 September.

The General Shareholders’ Meeting will analyse the capital increase on 9 October

Liberbank’s Board of Directors will propose the €500 million capital increase for approval at the next Extraordinary General Shareholders’ Meeting due to be held on 9 October.

The intention is “to accelerate” its strategic objectives and plan to improve profitability by strengthening its balance sheet and improving its risk profile. Currently, retail mortgage risk accounts for 60% of the entity’s total credit investment, according to Europa Press.

Specifically, the entity expects the default rate to amount to 3.5% by 2019 and for the ratio of foreclosures to fall below 9%; it also expects the coverage ratio to increase to around 50% by the same date.

The forecast return on equity (ROE) is 7% for 2019 and 8% for 2020. The entity plans to pay remuneration to shareholders, which it will charge to the P&L in 2018 with a payout of 20%, which will increase to 40% in 2020.

The major shareholders support the operation

The entity’s major shareholders, which together account for around 68.8% of the total share capital, such as Oceanwood (with a 12.6% stake), Aivilo – Ernesto Tinajero (7.4 %) and Corporación Masaveu (5%), together with the Banking Foundations (43.8%) support this operation and have already expressed their intention to participate in the capital increase, confirmed the bank.

At the end of trading on Wednesday, Liberbank’s shares were trading at €0.97, after increasing by 0.21% during the day. The company’s total share capital amounts to €900.54 million, according to Efe.

Original story: RTVE

Translation: Carmel Drake