Soured Loan Volume in CatalunyaBanc Reaches 22.3% Cap

26/06/2014 – El Confidencial

As per rating agency Moody´s, at the end of the first quarter of 2014, default rate at CatalunyaBanc shot up and stood at 22.3%. The score puts the bank in negative outlook in the light of the ongoing auction of the entity.

The volume consists of non-performing, sub-performing and awarded loans. Nevertheless, Moody´s admits that putting the €6.5 billion NPL portoflio apart might improve the rate which presently ranks the worst among the Spanish banks. The entity has already registered better figures in terms of deleveraging and coverage.

The US agency points out that even though the bank transferred all troubled loans to Sareb, its assets went on loosing their value. “After falling to 16.4% at the end of 2012, the rate jumped again in the first quarter of 2014”, Moody´s justifies the B3 mark . The entity itself told the rate post 13% at the end of 2013 but has not given the exact number of the doubtful loans.

Around 20% of the “Hercules” corresponds to highly demanded loans. Not the default itself is the biggest problem but the dramatically low profitability of the entity. According to the provided by the agency, without the carry trade CatalunyaBanc´s average profitability per benefit before provisions on risk-weighted assets shows a paltry 0.4%.

If that weren´t bad enough, Moody´s warns about the certain risk that the bank might fail the ECB´s stress test.

Given all that, the bidding has been abandoned leaving only Santander and La Caixa on the battle field. Still, the Frob (the Fund for Orderly Banking Restructuring) may count on an interesting price thanks to the merger of Caixa Catalunya, Manresa and Tarragona.


Original article: El Confidencial (by Eduardo Segovia & Agencias)

Translation: AURA REE