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Cerberus to Buy €5M Portfolio from Santander whilst BdE Reviews its Deal with Sabadell

19 September 2018 – El Confidencial

Banco Santander has chosen a buyer for the last portfolio of toxic assets that it still has on its balance sheet. The chosen entity is Cerberus, the opportunistic fund with which the bank chaired by Ana Botín has been holding exclusive negotiations for the sale of the so-called Apple portfolio, which has a nominal value of €5.1 billion, according to confirmation from sources close to the operation. If the deal is closed, the US entity will be the owner of a large part of the real estate business of Santander, BBVA and Banco Sabadell.

The final agreement depends exclusively on locking down the price that Cerberus is offering and that Santander hopes to obtain. The operation could be closed for a price of between €2.8 billion and €3.2 billion, according to the same sources. Banco Santander declined to make any official comment about this information, just like Cerberus. Debtwire, the specialist medium for professionals in financial markets revealed the name of the US fund as the main candidate to acquire this portfolio on 3 September.

If the exclusive talks prove fruitful, Cerberus will fight off competition from Apollo, Lone Star and Blackstone, the other three vulture funds that have also bid for this portfolio of homes, premises and land that Santander foreclosed in exchange for the non-payment of loans by its clients. In theory, the natural winner of the auction was going to be Apollo, which reached an agreement in principle with the Cantabrian bank at the beginning of August for around €2.9 billion.

Nevertheless, that deal fell apart in the middle of last month, to the anger of the fund led at that time by Andrés Rubio, President of Altamira, the real estate company owned jointly by Apollo and Santander since 2013. Rubio left Apollo in the middle of the transaction, which further weakened that firm’s chances of becoming Santander’s natural partner.

With this operation, Spain’s banks will complete the transfer of the majority of the risk linked to the property sector that they still have left over following the financial crisis. In fact, Santander already sold half of the toxic portfolio that it inherited from Popular last summer 2017 – €30 billion – to Blackstone for around €5 billion. Afterwards, BBVA placed almost €13 billion with Cerberus, whilst Lone Star acquired a portfolio worth €6.7 billion from CaixaBank along with its real estate arm Servihabitat.

The most recent high profile transaction announced was the purchase by Cerberus of €9 million of doubtful assets from Sabadell. Nevertheless, that operation is now being reviewed by the Ministry of the Economy given that the Deposit Guarantee Fund is going to have to recognise losses of around €3 billion as a result. That money will go against the State’s own income statement, given that what the Catalan bank, headquartered in Madrid, has sold to the US fund is the former Caja de Ahorros del Mediterráneo (CAM) portfolio, for which it received an asset protection scheme (EPA) (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake