A new disagreement between the Frob and the foreign funds due to the default credits of NCG Banco. It seems that the five investors interested in the 4000 million in credits will not be able to carry out their own due diligence, as explained to Expansion by some of these funds. This would imply making offers without fully knowing about the quality of the assets. “This is like walking blindly”, investors assure.
In exchange, the Frob and NCG will provide the information which has been previously analyzed by EY, based on which the investors will need to present their offers. This is not the usual procedure in the sale of default credits. Investors have demanded some sort of guarantee in exchange to cover their position in case the information they have received is not correct. This request has not been accepted.
The Frob has taken this decision in order to speed up the process and because it considers that the foreign investors already know the situation of the balance sheet of NCG, after months of analysis.
The funds have the impression that the Frob is using this process in parallel to the auction of NCG as a way to put pressure on banks so that they will not give a zero value to the default credits of the group. The Frob has opened the door for banks and funds to go together to the auction of NCG, thus maximizing the selling price.
The first disagreement between the funds and the Frob started in the auction of UGAS, the bad bank from NCG, where one of the pieces was these default credits. After months of analysis and negotiations, the Frob decided to call off the auction in the summer, surprising the three final funds: the U.S. Fortress and Centerbridge and the Norwegian Lindorff. The decision was taken after Spanish banks pressured to prevent the sale of NCG in different pieces before the auction started. But once it had started, the Frob decided to offer the 4000 million Euros in default credits to the three funds as a measure to compensate them for the failed auction of UGAS and to increase the value of NCG. This operation has awaken so much interest in the market that the fund lead by Antonio Carrascosa has opened it up to at least two more investors, Elliot and Marathon. The latter would invest jointly with Savia, from Javier Botín, son of the president of Santander.
The five funds interested will need to present their offers on the default credits before the 13th December, in parallel to the auction of the Galician group. Within this one, there are four interested banks – Santander, Caixabank, Banesco and BBVA – and five funds, although who seem to take it more seriously are Guggenheim Partners, WL Ross and JC Flowers. Most of them ask for public funding, something which was hinted by Economy this week.