3 May 2018 – Eje Prime
Sabadell’s real estate weighs down on its income statement by half as much as it did a year ago. The bank’s losses resulting from the property business decreased from €161.1 million to €84.8 million in just one year, according to figures published by the bank at the end of the first quarter of 2018.
The division of the financial entity that manages its property (the Asset Transformation Unit) recorded a negative result but gave the bank reason to hope. Sabadell justified the improvement to the increase in the gross margin on real estate, which rose by 57%, to €30 million, as well as to the 50% decrease in provisions and the impairment of the portfolios, with respect to the opening quarter of 2017.
Moreover, the bank is continuing to work on cleaning up its balance sheet of toxic assets. Its latest move in this regard involved the launch of a sales process for a real estate portfolio worth €7.5 billion, for which several funds are already bidding. Three of them, Cerberus, Blackstone and Lone Star, have been testing the water with the entity by suggesting that the operation, which is expected to be closed in the summer, should also include its servicer Solvia.
In this sense, during the first quarter, Sabadell increased its coverage ratio over doubtful debt in its real estate business from 56.7% to 62.7%. Thanks to that, the bank is able to apply higher discounts on the sale of its portfolios without having to incur losses that would negatively affect its income statement. Currently, the portfolio of inherited real estate assets that the entity chaired by Josep Oliu still maintains is worth almost €12 billion.
Original story: Eje Prime
Translation: Carmel Drake