29 July 2015 – Expansión
Big Bang. That is the name of the large operation that Bankia has launched to sell a huge portfolio of real estate assets, including foreclosed residential and commercial properties, whose gross value currently amounts to €4,200 million.
These are assets that were not transferred to Sareb back in their day because they did not fit in its perimeter.
After the summer, the entity led by José Ignacio Goirigolzarri will evaluate offers submitted by potential buyers to decide whether to go ahead with this project, which represents the largest single divestment project launched to date by the nationalised entity. Its successful completion would represent a definitive boost to the clean up of Bankia’s balance sheet. Blackstone, Lone Star and Apollo have all expressed interest in the portfolio.
“By September, we will have received clear expressions of interest”, revealed the CEO of Bankia, José Sevilla (pictured above), at a presentation to analysts of the results for the first half of the year, which showed an attributable profit of €556 million, up 11.5% on the same period last year. “Then we will decide whether the operation makes sense or not”, he added. (…)
Sources close to the operation state that the portfolio is flexible, in the sense that, it may be sold in one block or divided into several sub-portfolios based on asset type, to suit investors’ preferences.
After accounting for provisions, the net book value of the foreclosed portfolio amounts to €2,875 million. The majority of the assets, worth €2,122 million, were originally loans for house purchases, whilst those relating to real estate construction and development amount to €315 million – most related to finished buildings, but some also corresponds to land.
During the first half of 2015, the entity sold 4,135 properties, more than twice the volume sold in the same period last year (1,919), at discounts of between 30% to 35%. This may serve as a benchmark for the sales price that Bankia expects to obtain for the Big Bang portfolio. (…).
The act of managing the foreclosed assets represents a cost for the entity, whose objective is to use some of the funds it obtains from the sale to finance investments that boost its business, which is now focusing on granting credit to consumers and SMEs. (…).
In parallel, Bankia wants to accelerate the sale of its doubtful debt portfolios; and it expects to achieve the objective it has set of reducing the balance by €2,000 million in 2015. (…).
During H1 2015, the entity reduced its doubtful balances by €1,239 million, bringing the total down to €15,310 million and thus established a default rate of 12.2%, which represents a decrease of 0.7 p.p. since the end of 2014. Moreover, recoveries (€2,490 million) exceeded gross defaults (€1,720 million) during the six months to June.
Original story: Expansión (by Alicia Crespo)
Translation: Carmel Drake