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A new platform for buying bad debt from banks

26 May 2015 

JB Capital’s subsidiary manages 5,000 million euros of non-strategic assets of banks and hires 120 real estate agents.

The real estate market has a new player. Javier Botin, son of the late president of Santander, has broken into the purchase of residential assets in the hands of one of the subsidiaries  of JB Capital Markets.

With the growing volume of flats and housing loans of banks for sale, Savia Asset Management – subsidiary of JB Capital – has decided in recent months to set up its own real estate management platform.

Unlike large international funds, which in recent years real estate managers have purchased from banks, Botin has created its own from scratch, through an already organized team at Savia that has only been specializing in unpaid debt until now.

Thus, in recent months, this subsidiary of JB Capital Markets has hired 120 real estate agents, focused mainly on Madrid and the Mediterranean coast. It has closed the first round of  acquisitions of mortgage loan portfolios and foreclosed assets from banks.

Booming activity

According to the chief executive of Savia, Antonio Carballo, “in Spain, there is still much left to be sold this year and the next two.” He also adds that interest of international investors is at its peak: “Nobody fears the Spanish economy anymore. We were in the spotlight [negatively speaking] but it’s over now.”

Carballo holds the reins of the company as CEO, co-founder and shareholder. Prior to joining Savia, he worked at Vesta, Genworth, Moody’s, Barclays and Credit Suisse. Jose Manuel Hernandez Beneyto, a former executive of Santander, is the president of the subsidiary and second in rank to Javier Botin.

Savia currently has 90 professionals in charge of managing distressed debt. It also collaborates with several independent agencies for credit recovery. This allows the company to have a total of 200 employees focused on maximizing profitability of acquired portfolios.

The firm manages about 5 billion euros in outstanding loans of corporate, consumer, mortgage and real estate entities. Savia co-invests as a minority stakeholder along with foreign partners, and then manages the asset portfolio. It also offers services to third parties. Its strategy is to buy big packages of troubled debt on high discounts and make up a higher percentage than expected.

Carballo says 10 international partners are working with Savia. For the sake of confidentiality, he is reluctant to reveal any names. For the purchases of portfolios carried out in the last two years, Savia has partnered with funds such as York Capital, Yorvik, Perry Capital, Marathon and Axonic.

Mature market

Carballo explained how the distressed debt market has evolved in recent years. According to him, began to pick up at the time when Savia was founded – in early 2012. “Up until 2012, there was a stigma regarding selling troubled assets from banks. During that year and the next two, financial institutions found out what this was all about. And now the market is mature, so we will see large-scale transaction in the coming years,” says the CEO of Savia.

According to this executive, over the past three years it over 60 billion euros in non-strategic bank loans have been sold, without taking into account large transfers like the Octopus Project – the sale of 4.5 billion of credit by Eurohypo – or the Hercules Project – 6.5 billion of subprime mortgages from Catalunya Banc.

Initially, Savia does not intend to bid for projects such as Big Bang, in which Bankia is selling 4.8 billion in foreclosed assets, but rather for mid-sized portfolios.

Translation: James Leahu