BBVA Weights Up Transferring Its Debt Collection Agency to Funds

22/09/2014 – Expansion

BBVA is bound to follow the steps of other Spanish entities which decided to sell their divisions to obtain better capital gains. The entity chaired by Francisco Gonzalez considers conducting one of the greatest outsourcing operations seen in Spain in 2014.

The sale would include transfer of a part of collection team of the bank in Spain, 200 Risk Management clerks led by director Manuel Castro.

KPMG, advising on the operation, has already sounded out potential buyers from the market and the interest is significant. Only an approval from the administrative board of BBVA is pending to set the ball rolling.

The bank reckons that the default in its balance has peaked and the agency soon will no more represent a core importance. The groups delinquency rate in Spain decreased from 6.4% to 6.3% in the first half of the year, registering the first fall in defaulting on loans (from €12.5 billion down to €12.3 billion).

On the market, the sale is thought to be one of the years most important not only due to BBVA being among the biggest Spanish entities, even bigger after the acquistion of Catalunya Banc, but also because this bank has been refusing selling to foreign funds until now.

But so did all its rivals: Santander that outsourced Altamira and Reintegra, CaixaBank which sold a half of ServiHabitat, Popular by shedding Aliseda, collection and credit card agencies, and Sabadell that by selling its collection branch earned €162 million. The latest operation is expected to deliver much more in gains to BBVA.

Other entities that sold their debt servicing platforms were Popular which obtained €135 million for it, Banesto (€100 million), BMN (€39 million), Santander (min. €35 million) and Pastor (€24 million). In total, Spanish financial sector made almost €500 million on this sort of transactions.

Likewise in case of real estate firm transfers, banks hand over the divisions together with employees and a 10-to-15 year contracts in exchange for equity injection. This is what aforementioned Santander and Popular did but also Bankia, CaixaBank and Cajamar. Thanks to these operations, the banks earned €2 billion total in the last years.

Among the potential purchasers, sector points at U.S. vulture funds like Elliot, D. E. Shaw or Centerbridge, as well as Nordic collection platforms like Lindorff or Aktiv Kapital.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

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