Ibercaja Finalises the Sale of a €600M Real Estate Portfolio
8 December 2018 - El Periódico de Aragón
Ibercaja is continuing to take steps to best position itself ahead of its stock market debut, which is scheduled for next spring. The Aragon-based bank wants to divest more real estate assets before the end of the year to clean up its balance sheet and improve profitability, an objective that it expects will materialise in the coming weeks with the sale of a portfolio of problem assets worth around €600 million, according to confirmation provided by the entity yesterday to this newspaper. To carry out this operation, which is called Project Cierzo, it has engaged the investment bank Alantra, which is finalising the negotiations to find a buyer.
The move by Ibercaja follows the widespread practice across the whole Spanish financial sector and forms part of its strategic plan for 2018-2020, whose goals include the aim of reducing its toxic property assets by half (doubtful and foreclosed) with the mixed sale of around €2 billion in land and housing. That would help to improve efficiency, by bringing it below 55%, and would make the entity more attractive for future investors.
During the period 2015-2017, the bank led by Víctor Iglesias (pictured above, left) managed to clean up €1.6 billion. At the end of the third quarter of 2018, the volume of problem assets amounted to €3.9 billion, which represented a decrease of 10.1% (€437 million) with respect to the same period last year and of 7.3% (€304 million) compared to the end of 2017 (€4.2 billion), according to the figures provided by the entity at the beginning of November. Based on those numbers, Project Cierzo – which was revealed by Voz Pópuli – would represent a significant step towards the objective of cutting the entity's real estate balance in half by 2020, as there would be around €1 billion left to achieve that goal.
A month ago, Ibercaja announced that it had engaged the bank Rothschild, as an independent advisor for its stock market debut, a step that European legislation requires it to take before the end of 2020. Currently, the Aragon-based bank is controlled by the Fundación Ibercaja, which owns 87.8% of its share capital, a stake that must be reduced to below 50% to avoid a fine. The other shareholders are the foundations of three former savings banks –CAI, 4.85%; Badajoz, 3.9%; and Círculo de Burgos, 3.45%– which it absorbed when it purchased the Caja3 group in 2013.
The entity is working to ensure that its valuation is as high as possible, and so the specific date for the IPO will depend on the evolution of the market. Nevertheless, it is most likely that it will make the leap during the second quarter of 2019.
Original story: El Periódico de Aragón (by J. H. P.)
Translation: Carmel Drake