CatalunyaCaixa Inmobiliaria Completes 87% Capital Reduction

4 November 2015 – Economía Digital

During the crisis, the real estate and mortgage businesses of many banks in Spain ended up becoming a major hindrance on their balance sheets, due to soaring delinquency, the large portfolio of homes resulting from evictions and the depreciation of assets.

One of the most exposed savings banks was CatalunyaCaixa and, although it transferred a significant volume of its homes to Sareb and sold its portfolio of non-performing loans to Blackstone, the property crash left a marked dent on its results, which the bank – now in the hands of BBVA – has had to offset with a significant reduction in the capital of its real estate arm.

A capital reduction of €240 million

CataluynaCaixa Inmobiliaria has recently carried out a capital reduction amounting to €239.67 million, equivalent to 87% of its share capital prior to the operation. Following this reduction, the real estate company’s share capital has been reduced to €35 million, according to registry data.

Sources at the entity have explained that the reduction has been carried out to offset losses from previous years. Although the entity had already reflected these losses in its annual results, it had to reduce its share capital to make it equivalent to its equity position, something that is has done this year in one fell swoop.

Only 6,000 homes left

CatalunyaCaixa Inmobiliaria is the holding company for the homes owned by the bank, of which there are around 6,000, according to a statement by the entity. In 2012, it transferred the majority of its portfolio to the so-called bad bank, Sareb, involving 27,500 homes, as well as around 10,000 other assets from property developers.

It got rid of its most problematic properties through this transfer, but not its homes worth less than €100,000 or the developments worth less than €200,000. Those, together with the homes that have entered its portfolio since the transfer as a result of new foreclosures, bring the total to around 6,000.

Moreover, so as to not accumulate more housing stock and at the same time, clean up its balance sheet, it closed the sale of a problem mortgage portfolio to the US fund Blackstone in April for €4,123 million.

Original story: Economía Digital (by Xavier Alegret)

Translation: Carmel Drake