Bankia Sells €900 Mn in Distressed Debt to Cerberus, Lindorff & Unknown Fund

17/09/2014 – Expansion

Cerberus and Bankia tighten their business relationship. The U.S. fund, allied with Norwegian Lindorff, purchased a part of €900 million worth of troublesome loans of the bank.

The operation, known as Somo, encompasses 56.000 doubtful loans, substandard or very likely to become such, grouped in two portfolios: one composed of consumer credits to individuals (loans, credit accounts and credit cards) totalling at €318 million, while the other embraces financing of SMEs of €577 million. One of these portfolios fell into hands of Cerberus and Lindorff but the name of the buyer of the other part has not been disclosed.

This is not the first time that Bankia and Cerberus and Lindorff do a business. First fund bought a half (51%) of the entitys REO servicer Bankia Habitat together with its 400 employees for between €40 and 90 million. In turn, Lindorff and another fund Elliott acquired a non-performing loan portfolio worth €1.35 billion from the bank.

Balance Clean-up

Thanks to the transaction, Bankia has managed to offload €482 million in distressed debt. In accordance with the obligations imposed on the entity by Brussels, Bankia shall divest in all non-core assets jointly valued at €50 billion before 2015. By June 2014, the bank met 82% of the liability, shedding €41 billion in bad debts.

The strategy allowed it to reduce its delinquency rate from 14.7% to 14% in the first half of the ongoing year.

Aside from the Somo project, Bankia runs other large operations such as Amazonas which consists of 300 real estate-backed loans (properties and hotels) with a face value of €800 million.

Soon, the entity will seal a deal on a transfer of developer loan portfolio and a part of €300 million worth of assets proceeding from its old property fund Bankia Inmobiliario, found inside the Lake project.


Original article: Expansión (by J. Zuloaga)

Translation: AURA REE