30 June 2018 – Cinco Días
Spain’s banks have put their foot down on the accelerator to end the property hangover once and for all. And there is no letup. On Thursday, CaixaBank announced that it had reached an agreement with Lone Star to sell it 80% of its problem assets, including its real estate platform Servihabitat, worth €7 billion altogether, which means that the fund will disburse around €5.6 billion for the property of the Catalan entity (based on the valuation as at October 2017).
This operation caused CaixaBank’s share price to soar on Friday, rising by almost 7%, and closing trading with an increase of 3.32%, to reach a value of €3.706 per share.
Sabadell also saw its share price soar on the stock market after closing the sale of a portfolio of non-performing loans worth €900 million to the Norwegian fund Axactor. That was Project Galerna, the smallest portfolio of the four containing foreclosed assets and non-performing loans that the bank has put up for sale, and whose deadline for the presentation of binding offers ended last Wednesday.
The bank’s objective is to close the sale of the four portfolios in a competitive process with a value of €10.8 billion over the next two weeks, before it presents its results for the first half of the year. Despite that, the Catalan bank will not be able to deconsolidate from its balance sheet more than €5 billion, equivalent to the largest portfolio comprising problem assets proceeding from the bank itself.
The other portfolios, whose contents came from CAM, cannot be removed from its balance sheet until the Deposit Guarantee Fund (FGD) reaches an agreement with the banks and Brussels so that the losses that these sales generate are not included in the public deficit. The stumbling block with these portfolios is that they are backed by an Asset Protection Scheme (EPA), in which the FGD initially assumes 80% of the losses generated by the operation, and Sabadell the remaining 20%, although the channel being considered to resolve this problem leaves those percentages to one side.
The market, on the news of the sale of the Galerna portfolio and the existence of seven offers in total for the purchase of almost all of the entity’s property, reacted with a rise of 4.7%. Although by close of trading the increase had dropped to just 1.74%, the third largest of the selective, to finish with a share price of €1.4355.
Santander has joined these operations, by placing up for sale foreclosed assets worth €6 billion, almost all of the property still held by Santander España. A spokesperson for the bank declined to comment on the operation.
The advisor on the sell-side is Crédit Suisse.
This macro-sale is the second largest operation that the group chaired by Ana Botín (pictured above) has ever undertaken and could be its last, given that this final disposal will allow the group to get rid of almost all of its real estate.
Indeed, Santander starred in the first macro-operation involving the sale of real estate assets one year ago. Last summer, it surprised the market with the sale in a single operation of all of the property proceeding from Banco Popular, around €30 billion, to Blackstone, with whom it created a company in which the US fund holds a 51% stake and the bank chaired by Ana Botín owns the remaining 49%.
That operation put pressure on the rest of the sector, which started to replicate the formula. The second to repeat the formula, in fact, was BBVA, with the sale of €13 billion to Cerberus.
Sareb is also now sounding out the market regarding the sale of gross assets worth around €30 billion (around €13 billion net). Nevertheless, the bad bank must wait for the green light from the Government to be able to carry out that operation, given that Sareb is an institution that depends on the Executive. It was created to unblock the former savings banks that received aid for their property, which is why it will try to maximise the value of any operation that is undertaken in order to return the public aid.
Original story: Cinco Días (by Ángeles Gonzalo Alconada)
Translation: Carmel Drake