Offer Flooding For Catalunya Banc´s Mortgages Delays the Auction

27/05/2014 – El Confidencial

Surprisingly for the Frob (Spanish Fund for Banking Restructuring), the sale of the €6.5 billion worth of “trash mortgages” has awaken great interest among foreign funds, contrasting with the small number of offers submitted for the offices of the bank found outside its core area, Catalonia.

More than 40 investment funds bid for the loan portfolio, therefore the Frob re-set the deadline for binding offers at next week. Also, due to the fact that each fund sumbitted a different offer, some for a part of the loan cluster, some requiring special conditions, the Fund urged all bidders to present uniform proposals for the entire package.

On the other hand, the sale of Catalunya Banc´s office network (196 units) has retained only two investors, EVO Banco and Popular who moreover asked for financial support. Unsold offices will be attached to the whole entity at its main auction.

Along with the sales, the nationalized bank sells its €6.5 billion sub- and non-performing loan portfolio. Given the elevated risk brought about by the portfolio, the Frob pledged issuing a guarantee for the possible losses and in fact the warranty has called so much attention to the sale.

According to the Frob´s estimations, the aid will not cross €1.5 billion. With low price and high 10-year warranty, why the entity does not grant the Asset Protection Scheme and maintain the loans in its balance? The APS, though, can cause the bank to lose the entire amount, not only a part of the value.

Finally, the sale of Catalunya Banc as a whole to private hands. The entity launched an opportunity to look through its balance via the virtual data room. One observes there that the bank has got more deposits than loans and it is able to cover the default in 80%. Sadly, the business brings very poor returns.

Santander seems to be the most serious bidder, however also La Caixa, BBVA, Popular and Kutxa would like to grab the nationalized bank.


Original article: El Confidencial (by Eduardo Segovia)

Translation: AURA REE