Unicaja Considers the Sale of a Large RE Portfolio in 2019

12 February 2019 – Expansión

Unicaja accelerated the clean up of its balance sheet during the course of 2018. The Málaga-based entity decreased its volume of non-performing assets by 22%, in such a way that it is now close to the reduction objective it established in its latest strategic plan for 2020. That is according to the figures provided by the bank itself during the presentation of its results for last year.

The entity chaired by Manuel Azuaga (pictured above) ended 2018 with a volume of non-performing assets (NPAs) amounting to €3.6 billion, of which €1.7 billion were foreclosed assets and €1.9 billion were non-performing loans.

In five years, the bank has reduced its toxic legacy by 51% or more than €3.8 billion. Unicaja’s commitment to investors was to bring its exposure to problem assets down below the €3.5 billion mark before the end of 2020. The rate of sales of small NPA portfolios has allowed it to get ahead in the calendar that it established in its strategic plan. But the entity will continue its clean up.

The heads of Unicaja have reported their intention to continue with small portfolio sales during 2019. Moreover, they do not rule out carrying out the sale of a large portfolio in order to segregate a majority of the non-performing exposure, in a similar way to what most of the Spanish banks have been doing over the last two years.

Unicaja’s decision to carry out a massive property sale will depend, like in other cases, on the discounts that the entity will have to apply to its portfolio. The NPAs of the Malagan bank have an average coverage level of 57%, which means that a discount of a similar percentage could be applied to the book value without resulting in accounting losses for the entity this year.

High asset quality

Unicaja is, together with Abanca, the only Spanish bank entity that still retains ownership of its servicer, the real estate subsidiary through which it sells its homes and commercial premises.

The recent decision by Sabadell to sell 80% of Solvia to Intrum followed other previous operations that have seen the Spanish banks undoing their positions in the property segment, including the sale of Servihabitat to Lone Star by CaixaBank, and of Aliseda to Blackstone by Santander.

Beyond Unicaja’s plans for its property, the entity has been recording a positive trend in terms of the quality of its assets for several years now. The net inflows of problem loans have registered eight consecutive quarters of decreases, and between September and December, they recorded the largest decrease in the bank’s historical series.

Since 2014, Unicaja’s default ratio has also decreased by almost half: from 12.6% recorded in December 2014, the Málaga-based entity has managed to clean up its balance sheet to bring the rate of toxic loans down to just 6.7%.

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

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