npl-reo Market News: Spanish Real Estate Intelligence

Gonzalo Gortázar will be the CEO of the new entity and José Ignacio Goirigolzarri will be the Executive President.

White & Case has advised the European Investment Bank (EIB) and the European Investment Fund (EIF) on the securitisation of a portfolio of loans originated by Banco Sabadell.

The new banking group, whose combined doubtful loan portfolio will amount to more than 18.5 billion euros in total, will have to get rid of 20% of its assets, which will mean divesting 3.8 billion euros.

As a result of the pandemic, the debt market is expected to skyrocket by up to 40%, which would see it grow from the current volume of 84.4 billion euros to between 120 and 150 billion euros, according to LEM Loan eMarket.

International investment firms such as Fortress, Bain Capital and Bayview are opting to look for potential investments in southern European markets outside of Spain, putting operations such as the sale of NPL's in Santander and Sabadell on hold.

The NPL ratio could potentially rise to approximately 15% by the end of the year, leading to a total stock of NPLs (Non Performing Loans) of around €200 billion, similar to that of 2008.

The US fund has been expanding its investments in the real estate sector and anticipating new market niches, such as debt portfolios, and the logistics and residential rental segments.

Spain's six largest banks recognised provisions amounting to nearly 11 billion euros during the first half of 2020 to cover the increase in defaulted payments with liquidity lines from the ICO and mortgage moratoriums.

According to the Bank of Spain, the crisis will have a negative impact on the quality of the banks' credit portfolios, the magnitude of which will depend on its duration and severity.

Blackstone manages the mortgages and doubtful loans that it acquires from Spanish banks through Anticipa, however, this is the first time that it will do so for third parties.