Spain’s Banks Prepare for a Mass Sale of Refinanced Mortgages Ahead of a European Regulatory Change

14 January 2020 – Expansión

Spain’s large banks are preparing for the mass sale of refinanced mortgage portfolios to opportunistic investment funds over the course of this year, ahead of a European regulatory change that will come into effect from January 2021. The new rules will require most refinanced debt to be classified as non-performing loans, which will impose more onerous capital requirements on the entities holding those assets.

Refinanced mortgages are those whose borrowers are currently up to date with their repayments but whose terms (economic conditions or duration) have been adjusted to avoid defaulted payments.

In the year to September 2019, Spain’s eight listed banks (Santander, BBVA, CaixaBank, Bankia, Sabadell, Bankinter, Unicaja and Liberbank) removed problem loans amounting to almost €37 million from their balance sheets. No detailed figures are compiled about refinanced mortgages, but sources in the sector estimate that a new market worth thousands of millions of euros could be generated as a result of the upcoming legislative change.

According to the new criteria to be introduced by the European Central Bank, refinanced loans will be classified as non-performing if the associated income generated by them falls by more than 1% as a result of the new terms of the loan. With such a strict threshold, almost all such loans will, therefore, be classified as non-performing.

In this context, a new market is expected to emerge whereby the banks try to divest portfolios of refinanced mortgages that are still considered healthy, but at lower prices.

The likely winners will be opportunistic funds, such as Cerberus, Blackstone and Lone Star, which typically buy doubtful assets with average discounts of 70%, and go on to generate double-digit returns through a combination of synergies and economies of scale.

Original story: Expansión (by R. Sampedro)

Translation/Summary: Carmel Drake

Spain’s Banks Sell Off Debts to Reduce NPL Ratios

 January 2020 During the end of 2019 and the beginning of the new year, Spanish banks have sold, or are about sell, more than €8 billion in overdue loans. Almost all the country’s major banks have been steadily selling off large portfolios of debt, which increasingly are made up of unsecured loans. That represents a change from the focus on mortgages since the end of the real estate crisis. These days, delinquency rates on consumer loans have surpassed 5% of the total, with €5 billion in overdue loans and annual growth above 10%.

BBVA has recently sold the largest portfolios of debt, up to five billion euros in non-performing loans. Half of that has been in the form of unsecured debt, or, in other words, debts with no collateral. BBVA sold its Project Juno to Intrum last year. The portfolio included 300,000 unpaid loan contracts. The bank also recently sold the €2.5-billion Project Hera, made up largely of loans to SMEs, to Cabot and Carval Investors.

CaixaBank, for its part, sold the €865-million Astún portfolio, a group of unsecured loans to companies and individuals. Intrum also acquired the portfolio, along with 50% of the Vento portfolio, sold by Banco Sabadell.

Durante el final de 2019 y el comienzo del nuevo año, los bancos españoles han vendido, o están a punto de vender, más de € 8 mil millones en préstamos tóxicos. Casi todos los principales bancos del país han estado vendiendo constantemente grandes carteras de deuda, que se componen cada vez más de préstamos no garantizados. Eso representa un cambio del enfoque en las hipotecas desde el final de la crisis inmobiliaria. En estos días, las tasas de morosidad de los préstamos al consumidor han superado el 5% del total, con € 5 mil millones en préstamos vencidos y un crecimiento anual superior al 10%.

BBVA ha vendido recientemente las carteras de deuda más grandes, hasta cinco mil millones de euros en préstamos morosos. La mitad de eso ha sido en forma de deuda no garantizada, o, en otras palabras, deudas sin garantía. BBVA vendió su Proyecto Juno a Intrum el año pasado. La cartera incluía 300,000 contratos de préstamos impagos. El banco también vendió recientemente el Proyecto Hera de 2.500 millones de euros, compuesto principalmente por préstamos a pymes, a Cabot y Carval Investors.

CaixaBank, por su parte, vendió la cartera de Astún de 865 millones de euros, un grupo de préstamos no garantizados a empresas y particulares. Intrum también adquirió la cartera, junto con el 50% de la cartera de Vento, vendida por Banco Sabadell.

Original Story: El Confidencial – Óscar Giménez

Translation/Summary: Richard D. Turner

Bbva Completes Its Second Sale of Written-Off Loans in Less Than a Week

5 January 2020 BBVA sold two of its largest portfolios of written-off loans. Following the sale of “Project Juno”, the bank signed the transfer of a portfolio comprised of loans to small and medium-sized enterprises (SMEs) with an approximate gross value of €2.1 billion.

BBVA signed an agreement to transfer a portfolio of written-off loans (named “Project Hera”) to Cabot and funds managed by CarVal Investors. The loans were to SMEs, with a gross value of approximately €2.1 billion.

On Wednesday, BBVA announced another sale of a portfolio of written-off loans (known as “Project Juno”). In this case, the portfolio consisted of loans to consumers with a gross value of €2.5 billion. The operation was BBVA’s largest sale of a portfolio of written-off loans so far.

Over the past two years, BBVA has carried out several operations involving the sale of loan portfolios – mostly loans to developers and mortgages. Among them, the sale announced in December 2018 stands out. It was a portfolio of loans (known as (“Ánfora”) with an approximate gross value of €1.2 billion, primarily consisting of mortgages (both doubtful and bad loans). In addition, in June 2018, the bank sold a portfolio of loans to developers with a gross value of €1 billion, called “Sintra”; and in July 2017 it sold another portfolio of loans to developers with a gross value of around €600 million, known as “Jaipur”.

In November 2017, BBVA announced the transfer of its real estate business in Spain to Cerberus Capital Management, L.P., an operation that was completed in October 2018.

En español

BBVA ha cerrado un acuerdo para transferir a Cabot y a fondos gestionados por CarVal Investors una cartera de préstamos fallidos (bajo el nombre de ‘Proyecto Hera’) provenientes de pymes, con un valor bruto cercano a los 2.100 millones de euros.

BBVA anunció otra venta de una cartera de créditos fallidos (conocida como ‘Proyecto Juno’), en este caso compuesta de préstamos a consumidores, por valor bruto de 2.500 millones de euros. Esta operación fue la mayor venta de una cartera de créditos fallidos que ha realizado BBVA hasta la fecha.

En los últimos dos años, BBVA ha cerrado varias operaciones de venta de cartera de préstamos, en su mayoría, de crédito promotor e hipotecario. Entre ellas, destaca la venta anunciada en diciembre de 2018 de una cartera de créditos (conocida como ‘Ánfora’), por un valor bruto aproximado de 1.200 millones de euros, compuesta principalmente por créditos hipotecarios (dudosos y fallidos). Asimismo, en junio de 2018 firmó la venta de una cartera de crédito promotor por valor bruto de 1.000 millones de euros, llamada ‘Sintra’; y en julio de 2017, otra cartera de préstamos al sector promotor, con un valor bruto cercano a los 600 millones de euros, bajo el nombre de ‘Jaipur’.

En noviembre de 2017, BBVA anunció el traspaso de su negocio inmobiliario en España a Cerberus Capital Management, L.P., operación que se cerró en octubre de 2018.

Original Story: BBVA

Merlin Properties Postpones Acquisition of BBVA’s Stake in the Distrito Castellana Norte

3 January 2020 Merlin Properties has postponed its acquisition of shares in the Operation Chamartín from BBVA due to its discontent over the current direction of the Distrito Castellana Norte (DCN). Together with the 14.46% stake the firm had acquired from San José, the acquisition would have made Merlin the largest shareholder in the mega-development.

At the same time, the government of the Community of Madrid is slowing down its approval of zoning regulations for the new urban development.

Merlin Properties ha postergado su adquisición de acciones en la Operación Chamartín de BBVA debido a su descontento por la dirección actual del Distrito Castellana Norte (DCN). Junto con la participación del 14,46% que la empresa había adquirido de San José, la adquisición habría convertido a Merlín en el mayor accionista del mega desarrolló.

Al mismo tiempo, el gobierno de la Comunidad de Madrid está retrasando su aprobación de regulaciones para el nuevo desarrollo urbano.

Original Story: Eje Prime

Translation/Summary: Richard D. Turner

 

Merlin Properties Prepares New Offer for Operation Chamartín

28 November 2019 – Merlin Properties has finalised an agreement with BBVA and the San José construction group to give it the right of first refusal for a stake in the North Castellana District (DCN), where the San José holds a 10% stake and the bank 75.54%. The socimi, however, intends to make an offer right away.

Merlin Properties currently has a 14.46% stake in the Operation Chamartín development and is looking for greater control. Merlin had already offered to trade control of 700 offices that it currently rents to the banking group for the operating rights to Operation Chamartín. The bank, however, is seen to be more interested in taking a stake in Merlin Properties itself, possibly of 2%.

Original Story: OK Diário – Borja Jiménez

Adaptation/Translation: Richard D. K. Turner

Banco Santander Mulls a Possible Sale of its Stake in Metrovacesa

28 October 2019 Banco Santander is studying a possible sale of its stake in the developer Metrovacesa. The bank currently has a 49.4% stake in the firm, while BBVA controls 20.8%. Santander sees its investment as non-strategic, while the Bank of Spain continues to pressure the country’s financial institutions to reduce their exposure to the real estate market.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Trinitario Casanova Files €713-Million Lawsuit Against BBBVA

16 October 2019 Trinitario Casanova announced that he had filed a €713-million lawsuit against BBVA, demanding compensation for damages stemming from Operation Chamartín.

The owner of the Baraka Group contends that he is filing the lawsuit to defend the right of reversion that he acquired from the members of the Non-Abuse association, an NGO which was created to defend the rights of the original owners of the land where the Chamartín station is now located.

In his lawsuit, Casanova argues that BBVA should pay him a total of 713 million euros should it not wish to accept the executive’s right of reversion and return the 1.3 million square meters of land linked to the Operation Chamartín.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

BBVA Looks for Buyer to Acquire Up to €1.3 Billion in Toxic Real Estate Assets

14 October 2019 BBVA is looking to sell off up to a third of its approximately €1.3-billion portfolio of non-performing real estate assets. The Spanish bank acquired many of the assets during Spain’s financial and real estate crisis when BBVA bought up several of the country’s failing savings banks.

The bank is looking to rid itself of the €3.6 billion in foreclosed assets and €1.345 billion in shares of real estate companies, in addition to unpaid loans from SMEs and individuals valued at about €5 billion.

Some of the groups potentially interested in acquiring the assets include Cerberus, which already bought BBVA’s real estate business in 2018, Apollo, Blackstone, Bain Capital and Lone Star.

The sale, which consists of residential, commercial and land assets is still in its initial phase. However, the bank is looking to complete any sale before the end of the year.

Original Story: Business Insider – Adrián Francisco Varela

Adaptation/Translation: Richard D. K. Turner

BBVA Breaks off Talks for Sale of Operation Chamartín with Merlin Properties

1 October 2019 – BBVA has informed Spain’s National Securities Market Commission (CNMV) that it has broken off talks regarding the potential sale of its development rights to the Operation Chamartín project. The bank did not cite a reason for the breakdown in the talks. Merlin Properties had recently  made a preliminary offer of almost 700 bank branches it leases to BBVA in exchange for the rights.

Recently, other candidates, such as the Canadian investment group Brookfield and the sovereign wealth fund Qatar Investment Authority, have also demonstrated an interest in the project. Construction in the Operation Chamartín area is expected to last for 25 years and require total investments of over €7 billion.

Original Story: La Vanguardia – Conchi Lafraya

Photo: Dani Duch

Adaptation/Translation: Richard D. K. Turner

Merlin Offers 699 Bank Branches to BBVA in Return for Rights to Operación Chamartín

30 September 2019 – Merlin Properties has offered 699 offices that it currently leases to BBVA in return for the Spanish bank’s rights to the Operación Chamartín, a 3.3 million-square-meter new urban development in northern Madrid. Merlin is in the final stages of negotiations with BBVA to take over what will be the largest urban development in Spain and one of the largest in Europe. For the bank, the deal offers the possibility of acquiring its offices with no capital outlay and avoiding future rental payments.

Operación Chamartín encompasses land that is 5.6 kilometres in length and up to one kilometre in width. The development will consist of residences, offices, retail stores, parks, gardens and other amenities and facilities such as schools.

In November 2018, BBVA had already re-acquired 166 branches from Merlin for €252 million. Based on that sale, the remaining 699 bank branches could have an estimated total value of approximately €1.1 billion.

Original Story: El País – Íñigo de Barrón

Adaptation/Translation: Richard D. K. Turner