• Transaction / Assets
    Lone Star Buys €7 billion in Toxic Assets from CaixaBank
  • Seller
    CaixaBank
  • Buyer
    Lone Star
  • € MM
    7000

Lone Star Buys €7 Billion in Toxic Assets from CaixaBank

29 June 2018

CaixaBank will sell 80% of its real estate business to the U.S.-based Lone Star fund. The transaction is expected to cost the American fund seven billion euros.

Novo Banco’s new owner agreed to buy seven billion euros worth of toxic assets from the owner of BPI. The operation, which is now waiting for a “green light” from the Competition Authority (CNMC), would result in the sale of 80% of CaixaBank’s real estate business. According to Cinco Días, the Spanish bank believes that the transaction will have a “neutral impact” on its accounts.

The transfer of the assets from the Spanish bank to the US fund is expected to take place in several phases. First, CaixaBank will transfer the toxic real estate assets (with a gross value was approximately 12.8 billion euros as of October 31, 2017, and an approximate net value of 6.7 billion) to a new company, along with Servihabitat. Later, the bank will sell 80% of that company to Lone Star, maintaining a 20% stake in it. The transaction will be carried out through Building Center, CaixaBank’s real estate subsidiary.

According to La Vanguardia, the transaction mainly involves the portfolio of real estate assets held for sale on October 31, 2017, and 100% of the capital stock of Servihabitat. It is important to note, therefore, that the disclosure of this transaction is occurring a few weeks after CaixaBank announced that would re-acquire 51% of Servihabitat.

According to Gonzalo Gortázar, CEO of the Spanish bank, the transaction will further the bank’s goal of reducing its toxic assets and will have a “neutral” impact on its accounts.

The formula chosen for this deal is an old one. Santander (which sold 51% of Banco Popular to Blackstone) and BBVA (which sold its problematic assets to Cerberus for €13 billion) followed the same strategy.

Following a series of securities purchases, CaixaBank already holds 94% of Portugal’s BPI. As for Novo Banco, the institution led by Palma Ramalho passed into the hands of Lone Star at the end of last year. The agreement reached between the Bank of Portugal, the Resolution Fund and the Americans handed over 75% of the banking institution to the latter.

Original Story: Economia Online – Isabel Patrício

Translation: Richard Turner