The Santander group has sold a portfolio of 300 million Euros in default consumer loans to Elliott Management, with a discount of 96%. This vulture fund, which keeps a virulent dispute with Argentina on the release of its sovereign debt, intends to do more operations in Spain.
The multimillionaire Paul Singer, public enemy number one in Argentina, lands in Spain. This investor has acquired a portfolio of default consumer credits from Santander Consumer Finance through its fund Elliott Management with a nominal value of 300 million Euros. Official sources from Santander declined any comments on this operation.
The price paid by Singer´s investing company is practically symbolic: around 12 million Euros, according to sources within the market. The difficulty in being able to recover anything from a portfolio of 87000 operations leads banks to offer bargain prices in order to get rid of them.
For Elliott Management, founded in 1977 by Paul Singer and with 21000 million dollars (16170 million Euros) in managed assets, this operation is the beachhead for future acquisitions in Spain. The group has available funds and considers that the current situation of the Spanish financial sector presents good business opportunities.
The majority of loans within the sold portfolio are for the purchase of cars, although there are also personal loans and for companies. The average amount is 3500 Euros.
The Santander group has closed similar operations during the last few months. In October 2012 it sold a portfolio of loans with a nominal value of 1000 million Euros to Bank of America Merril Lynch and in April 2012 it got rid of another 1000 million Euros in consumer loans, which were transferred to Fortress, specialized in the purchase of default loans.
The company Gesif has participated as a consultant in the operation, in order to measure the recovery possibilities of this portfolio and will offer Elliott its services to manage those default loans.
Paul Singer´s preference for the acquisition of high risk assets has lead him to conflicts with several governments, once his firm has tried to charge its investments in sovereign debt.
The most notorious case was the open conflict with the Argentinian government. Singer keeps a legal claim against the South American country for the non payment of a debt of 370 million dollars (around 270 million Euros) accrued in 2001.
In October 2012, Singer managed the withholding of the vessel Libertad, training ship of the Argentinian army, by the Ghanan government, as an asset which could be seized for the payment of a debt, but finally it was liberated and it returned to Buenos Aires last week.
Source: Cinco Días