7 November 2017 – El Economista
Spain’s banks do not want to pass up the opportunity that currently exists in the market to get rid of their toxic assets linked to the real estate sector as quickly as possible. Funds’ interest in acquiring properties and problem loans continues at the same level as during the summer, when Santander reached an agreement to transfer almost all of Popular’s real estate portfolio, worth €30,000 million in gross terms, to Blackstone.
BBVA announced a few weeks ago that it is negotiating with Cerberus to close a similar operation, although it did not share any details about the perimeter in that case. And now, it is Bankia’s turn to tread the same path and resume Project Big Bang to a certain extent, after it was suspended two years ago. The nationalised entity is currently analysing putting up for sale all of the real estate assets that it still holds on its balance sheet. The transaction would include the assets it inherits from BMN once both groups have merged at the end of this year.
This is one of the “strategic priorities” for the next few months, said Bankia’s CEO, José Sevilla, speaking recently at a press conference with analysts. He assured his audience that investors have an appetite for this type of large portfolio at the moment, unlike two years ago.
Just over €6,000 million of assets
The volume of the operation, if it goes ahead, in the end, will be significantly smaller than the deal closed by Santander, given that both Bankia and BMN have fewer foreclosed assets and doubtful debts. A significant part of their balances was transferred to Sareb in 2012 and 2013, under the framework of the bank rescue. Once the group chaired by José Ignacio Goirigolzarri has absorbed the Levante-based entity, it will have around €6,300 million in loans to property developers and foreclosed assets in total, a third of all the non-profitable assets – which include doubtful loans granted to other sectors.
Specifically, Bankia has €3,150 million in properties, with a coverage ratio of 34%, whilst BMN has €1,470 million, with provisions covering 28% of its risk. In terms of financing to property developers, the volume managed by Bankia amounts to almost €1,100 million and the amount handled by the bank led by Carlos Egea amounts to approximately €600 million.
Commercial focus on companies with a service platform
Between now and the end of the year, Bankia is going to place its commercial focus on the business segment, for which it has created a platform for services that complement financing. According to the director of this business, Gonzalo Alcubilla, access to loans is no longer a concern for companies and so now, they are asking about how to enter new markets and secure new clients to increase their turnover.
In fact, Bankia currently rejects fewer than 10% of the loan requests its receives. In this context, it has created “Soluciona Empresas”, a pack of free digital tools that helps businesses take management decisions, such as advice regarding exporting overseas. The platform may be used both by companies that are clients of the entity as well as by those that are not, according to Alcubilla speaking on Monday at the presentation of the instrument. The tools are grouped together for three purposes: to sell more, manage risks and obtain resources.
Original story: El Economista (by Fernando Tadeo)
Translation: Carmel Drake