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Goirigolzarri Finalizing Sale of 700 Million Euros in Credits to 3 Funds

5/02/2014 – Expansion

Bankia, presided by José Ignacio Goirigolzarri, is just finalizing the sale of a default credit lot, bound to bring the bank around €200 million capital gains in 2014. The entity will also carry on with the balance reduction, imposed by Brussels.

The fourth financial group in the country is negotiating with three opportunistic funds (also known as “the vulture funds”) on a transfer of €700 million in unpaid credits, in a great number proceeding from SMEs and backed by real estate assets, according to the sources consulted by Expansión. Bankia believes to receive up to €50 million capital gains.

The operation, named “Proyecto India 6” (“the India 6 Project”), consists of 3 subportfolios. The first, called Jumbo, is compound of 400 defaulting credits of the SMEs being currently under creditors´arrangements process. A great number of them are collateral with real estate assets, let it be the liquidated shops or even houses of the businessmen who offered them as a guarantee. (…).

Collection Stages

The second subportfolio, Concorde, gathers defaulting SME credits in early stage of unpayment worth more than €200 million, (…) in majority of the cases backed by real estate property in presential stage of collection.

The last asset lot, called Spitfire, consists of individual consumer loans valued at €100 million.

(…) Instead of habitual 3-4% recovery rate, the India 6 Project is said to bring about between 5 and 10%. If it happens, Bankia will earn between 35 and 70 million Euros. (…).

Interested Funds

Each subportfolio received the best offer chosen by Bankia. (…).

The names of the three funds have not been revealed, however the sector confirms the names of the five most serious investors at the auction: Savia Asset Management of Javier Botín, Elliot of the controversial U.S. businessman Paul Singer, Cerberus, one of the biggest funds in global terms, D. E. Shaw of an ex-assessor of Bill Clinton and the U.S. AnaCap.

Original article: Expansión (Jorge Zuloaga)

Translation: AURA REE