Banks Expect To Sell Land & Developments Worth €12,000M

10 December 2015 – Expansión

The banks’ divestment teams are facing a frantic couple of weeks. The main Spanish entities have twenty operations underway through which they are seeking to remove more than €12,000 million in loans and real estate assets from their balance sheets, equivalent to 5.5% of their current exposure. Most of these deals will be closed before the end of the year.

Thanks to these operations – and others closed since June, plus the sale of homes through the retail channel – Spain’s banks may reduce their problematic loans to €200,000 million within the next few months, compared with the balance in June (€224,000 million). This level represents 8.7% of the total assets held by Spain’s banks, which “put downwards pressure on the entities’ income statements, reducing their ability to generate profits”, according to the Bank of Spain.

The portfolios currently up for sale include all types of assets, including homes, plots of land and developments – both completed and in progress. Of the €12,000 million, around half are doubtful loans secured by these types of collateral and the remainder are foreclosed assets.

Key operation

The largest operation in progress is Bankia’s Project Big Bang, whereby the nationalised entity is looking to transfer the majority of its foreclosed assets: 38,500 homes, 2,600 plots of land and 5,000 commercial premises, worth €4,800 million.

The bank has two offers on the table: one from Cerberus for 75% of the assets and another from Oaktree, although the technical complexity and the upcoming general election mean that this operation is going to be delayed until the first quarter of 2016.

Bankia also has another portfolio up for sale, containing €700 million doubtful property developer loans, linked to commercial and industrial assets – namely, Project Babieca.

The most active entity in the market at the moment is Sareb. The bad bank has five portfolios up for sale with a nominal volume of €2,200 million. Through these, the bank is seeking to increase its revenues in a year that has been made difficult by the migration of assets to new managers and the new accounting circular.

CaixaBank and Sabadell have been just as active this year. The entity led by Isidro Fainé has already sold two portfolios and has a third one up for sale, containing doubtful property development loans, for €900 million. Meanwhile, Sabadell is finalising the sale of 5,000 homes for rent, which comes soon after its sale of CAM’s real estate companies to Sankaty.

Other entities that are working hard to complete major divestments include Ibercaja – with an operation to sell the majority of its foreclosed assets, forecast for the beginning of 2016 – and BMN, which has a portfolio of doubtful loans and homes up for sale.

Looking ahead to 2016, the experts expect to see large operations involving the sale of problematic assets such as those of Bankia and Ibercaja, and a larger role for the major banks, Santander and BBVA, which decided to suspend their sales in 2015.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake