20 April 2016 – Expansión
Sabadell has become the most determined Spanish entity when it comes to trying to clean up its balance sheet. The entity chaired by Josep Oliu (pictured above) has two portfolios up for sale through which it hopes to sell off €1,300 million of non-performing assets. Moreover, it may soon add another €1,700 million portfolio, if a large deal that the entity is currently preparing eventually goes up for sale. In total, €3,000 million, of which €2,200 million comprises doubtful loans linked to real estate developments, and which represent around one sixth of its doubtful assets in Spain. The remainder, €800 million, relate to non-performing consumer loans.
The latest divestment to come onto the market is Project Pirene, advised by KPMG, containing €460 million of problem assets linked to property developers, according to sources consulted at international funds. Unlike some of its recent operations, this one originates from Sabadell’s own business, and not from CAM, Caixa Penedès or Banco Gallego.
This operation combines Project Corus, with €800 million non-performing consumer loans; and Project Normandy, under assessment, with €1,700 million non-performing real estate loans, according to El Confidencial.
The Catalan group hopes to close the first two operations within the next two months, so that they may be accounted for in its financial statements for the first half of the year. Meanwhile, Project Normandy may be delayed somewhat due to its large size. In fact, the operation would be one of the largest seen in Spain in recent years. The largest, Project Big Bang, containing €4,800 million in foreclosed assets, was suspended by Bankia due to its complexity and the large discounts being demanded by the funds.
Sabadell was one of the Spanish entities that reduced its default rate by the most during 2015. Following the purchase of the British bank TSB, its default rate fell by almost five percentage points. If we exclude that acquisition, the rate fell by almost three percentage points, from 12.74% to 9.86%. In total, the entity manages €21,500 million of problem assets, with a coverage ratio of 53% for its doubtful debts and of 44% for its real estate assets.
Besides these operations launched by Sabadell, only a handful of other entities have decided to divest their problem assets so far in 2016, namely Cajamar, Bankia and BBVA. Popular announced that it would be very active, but it has not yet put any portfolios on the market.
Original story: Expansión (by J. Zuloaga)
Translation: Carmel Drake