Davidson Kempner Buys €216.3 Million in NPLs from Novo Banco

8 March 2021 – Ana Custódio

Novo Banco announced that Davidson Kempner Capital Management had won the tender to acquire the Wilkinson Project, a portfolio of bad debts.

In the statement, Novo Banco noted that: “The completion of the transaction, under the agreed terms, is expected to have a neutral to marginally positive direct impact on Novo Banco’s income statement and capital in 2021.” Davidson Kempner had also already acquired Novo Banco’s Nata 2 portfolio in 2019. The portfolio consisted of €3 billion worth of bad debt which stemmed from Ongoing, a bankrupt group previously helmed by Nuno Vasconcellos, and Sogema, which had been owned by the executive Bernardo Moniz da Maia.

The Wilkinson Project comprises bad debts totalling 216.3 million euros, made up of defaulted loans from large debtors. The debts are not covered by the Resolution Fund’s Contingent Capitalisation Mechanism (CCA).

The sale of bad debt portfolios to specialised funds reduces the stock of bad debts more quickly and thus reduces NPL (non-performing loan) ratios. The deal comes at a time when Novo Banco is continuing its efforts to clean up its balance sheet.

Atena Equity Partners (in consortium with Blantyre) and Bank of America Merrill Lynch were also in the running for the Wilkinson Project, but Davidson Kempner was chosen for this operation.

Translation: Richard Turner

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