Tag: Catalunya Banc

BBVA Puts Torre Puig Building Up For Sale

6 October 2016 – Expansión

BBVA has put the building that houses the corporate headquarters of the perfume and fashion group Puig up for sale. The property is located in Plaza Europa in L’Hospitalet de Llobregat (Barcelona).

The family-backed Catalan multinational company, which leases this building, has the option to purchase it in the event that it is put up for sale, as has now happened, according to sources close to the operation.

Sources in the real estate sector calculate that the skyscraper could be sold for between €55 million and €65 million.

The operation, known as Project Torre, is being advised exclusively by the real estate consultancy Aguirre Newman.

The corporate building in Plaza Europa, which was opened two years ago, to coincide with the centenary of Puig, was taken over by BBVA as a result of its acquisition of CatalunyaBanc (CX).

Designed by the architect Rafael Moneo, the skyscraper is located in Barcelona’s new corporate and business centre and has a surface area of 14,288 sqm distributed over 21 floors. In addition, the building has three basement floors.

Puig’s corporate headquarters houses an auditorium, gym, meeting rooms, cafeteria and restaurant, amongst other spaces.

Torre Puig has a LEED Gold energy efficiency certificate, which is an international hallmark of excellence granted by the Green Building Council of the USA that recognises the environmental quality of buildings.

Original story: Expansión (by J.O. and S.S.)

Translation: Carmel Drake

Moody’s: Spain’s Banks May Securitise €105,000M Of Problem Assets

5 October 2016 – Expansión

Moody’s Forecast / The US giant Blackstone has opened an alternative route for Spanish entities to accelerate the clean up of their balance sheets, through the placement of securitisation funds containing restructured credits.

This week will see the placement of the first securitised fund of problem mortgages on the market in Europe by Blackstone, in a move that is set to pave the way for Spain’s banks to replicate the model. Blackstone’s plans involve the sale of some of the assets (€265 million) that it bought from Catalunya Banc in 2015, for a nominal value of more than €6,000 million.

The ratings agency Moody’s estimates that Spain’s banks have €105,000 million in refinanced or restructured problem loans in total, primarily mortgages, which may be put on the market through securitised funds. “The banks are under pressure from the ECB to reduce this load as quickly as possible, to clean up their balance sheets and improve their returns”, said Moody’s in a recent report. According to PwC, half of the problem loans in Europe are held by borrowers in Italy, Spain and Ireland.

Assets susceptible to being securitised are those that have been modified to help the borrower pay, although they do not necessarily need to have been in arrears in the past. The original loan may have been refinanced (offering a new loan to repay the existing one) and/or restructured (changing the terms and conditions). This figure is lower than the total volume of overdue loans owing to Spain’s banks, which amount to €138,000 million and foreclosed properties (€113,000 million).

For example, in its securitised fund, Blackstone has included only those loans that have been performing (being repaid) for more than 37 months in a row, therefore, they are considered to be “high quality” problem assets. In exchange, they offer an attractive yield, more than 100 basis points above Euribor, with a discount of just 10% for those funds prepared to bear the most risk.

In order to open up this market, players have worked hard to obtain support for these types of securitisations from the regulators. Both the ECB, as well as the Bank of England and the European Banking Authority have been working to create specific pan-European regulations to facilitate more simple, transparent and standard securitisations, pending approval from the European Parliament. According to Moody’s, securitisations of refinanced and restructured credits would fall within this definition, which should facilitate their placement amongst investors.

Investors

The most active buyers of these types of problem asset portfolios in Europe may now also participate as investors in this market. According to data from Deloitte, Oaktree, Lone Star and HSH are the most active purchasers, with more than €5,000 million, followed by others such as Bain Capital, AnaCap and Apollo.

Until now, many of the portfolios sold by the banks to these funds have been transacted through bilateral operations. Nevertheless, the economic recovery means that the volume of refinanced loans that are now performing (being repaid) is increasing, which means that the sector could generate higher returns from these kinds of securitisations.

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake

Blackstone Creates Europe’s First Restructured Loan Securitisation Fund

4 October 2016 – Expansión

The US giant Blackstone is doing great business in Spain with the problem assets that it bought from Catalunya Banc at the beginning of 2015. And it is now going to set the cat amongst the pigeons with an operation that looks set to represent a golden solution for its competitors and Spain’s banks in general.

The firm has just created the first securitisation fund in Europe from restructured loans. It is a pilot test, involving €265 million of credits, but it will likely open the way for other Spanish entities to dispose of the majority of their problematic loans without having to sell them to vulture funds at knockdown prices.

Blackstone completed the purchase of Catalunya Banc’s problematic mortgage portfolio for almost €3,600 million in April 2015 – the portfolio had a nominal value of more than €6,000 million – that sale was a condition for BBVA to acquire the Catalan group. The purchase was structured through a fund to which Blackstone contributed €3,598.4 million and the FROB the remaining €524.9 million.

The well trodden path

Now Blackstone, which has spent almost a year “negotiating” with the CNMV to obtain approval for this operation’s prospectus, is selling these mortgages to qualifying investors through a traditional securitisation fund, like the ones created in Spain to finance the credit boom until the outbreak of the financial crisis, but with the difference, given that this time the fund involves restructured loans. In other words, it contains credits whose conditions have been altered to allow the borrowers to afford the repayments.

Financial sources explain that, rather than discounts of 70%, such as those being applied to the direct sale of portfolios through bilateral contracts between entities and the funds who are active in this niche of the market – such as Apollo, Lone Star and Centerbridge, as well as Blackstone – these mortgages may now be placed on the market with discounts of less than 10% for the most subordinated (higher risk) tranches.

Nevertheless, these portfolios contain loans that borrowers have been repaying for more than 37 months without any help, thanks to the economic recovery, in other words, they contain “high quality” problem loans. In total, they will generate returns of more than 100 basis points above Euibor and so represent an interesting alternative for investors looking to take on more risk in the almost-zero interest rate environment.

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake

Bankia & Apollo Go To Court Re Sale Of Finanmadrid

3 October 2016 – Expansión

Both entities are waiting for the discrepancies that arose from the sale of Finanmadrid to be resolved. The sale was completed in 2013 for €1.6 million

Fracciona Financiera Holding, the subsidiary of Apollo, filed the first lawsuit, in which it claimed €8.5 million from Bankia due to discrepancies in the sale and purchase contract based on the determination of the sales price for Finanmadrid.

The contract included clauses that have an impact on the basis of the evolution of various parameters. These conditions have been common in multiple sales operations closed in the financial sector since the outbreak of the crisis. The asset protection schemes (EPA), which cover the buyers of former savings banks, are the most visible example of these types of operations.

Bankia has responded to the lawsuit filed by Apollo, with its own claim for €6.4 million.

Finanmadrid, which used to specialise in offering consumer credit through retailers and car dealerships, has now been integrated into Avant Tarjetas, a subsidiary of Evo Banco, controlled by Apollo. Previously, it was integrated into Fracciona Financiera Holding. In the company’s accounts from last year, the audit report explains that “in the opinion of the company’s legal advisors, an unfavourable outcome from the lawsuit (with Bankia) is remote, nevertheless, the shareholder (Apollo) would financially support any contingency that may arise in the event that no provision has been recognised”.

Before the integration, Finanmadrid reduced its share capital by €2.24 million to absorb losses and so it was left at €2.79 million.

Apollo’s claim against Bankia forms part of a broad range of claims against the entity chaired by José Ignacio Goirigolzarri. In total, the bank faces claims amounting to €390 million, not including the claims relating to its debut on the stock market and the sale of its preference shares.

Claims

The largest claim, amounting to €165 million, is one presented by ING Belgium, BBVA, Santander and Catalunya Banc against Bankia, ACS and Sacyr. (…).

The construction group Rayet also claims €78.2 million from Bankia for what it considers are accounting irregularities and for differences in the valuation of plots of land linked to the debut of Astroc on the stock market in 2006, an operation piloted by the former Caja Madrid.

The bank has 305 legal proceedings open relating to derivatives with claims amounting to €38.8 million.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

Bankia & Santander Lead Decrease In Mortgage Default Rate

12 September 2016 – El Economista

The economic recovery is substantially easing the burden of provisions that the banks are making against their non-performing loans. The volume of bad debts have been decreasing gradually over the last few months, thanks to the overall improvement in the financial circumstances of families and companies.

An important part of this respite is coming from the mortgage segment. Families now hold financing to acquire homes amounting to just over €525,000 million in total. Unemployment, which wrought havoc during the crisis, had increased the default rate to more than 6%. But that trend changed at the end of 2014. Since then, the default rate of these types of loans has decreased to 4.7%, on average. In other words, the volume of mortgages with delayed repayments has decreased to €25,000 million.

Not all of the banks have managed to benefit in the same way from the improvement in Spaniards’ fortunes. Bankia and Santander are the entities that have benefitted the most over the last year. Between June 2015 and June 2016, Bankia’s default rate decreased by almost a quarter, from 6.76% to 5.02%, and by nearly a half since its historical peak in 2014. Even so, the absolute percentage of the nationalised group still exceeds the system average.

The decrease in Bankia’s default rate has come at a time when the bank is significantly reducing the volume of loans it grants to acquire homes. In the case of Bankia, the cut in the volume of financing is similar to that recorded in the sector. It has decreased by 4.3% in twelve months (…).

Since 2012, the nationalised group’s strategy has involved rebalancing its credit portfolio, with a drop in mortgages and an increase in loans to SMEs and individuals.

In the case of Santander, the default rate has decreased by 0.81 percentage points to 4.59% over the last twelve months, allowing the bank to maintain a ratio that it slightly lower than that of its rivals. In 2013, the Cantabrian entity’s default rate (6.7%) exceeded the sector average. Since then, the decrease has been gradual.

The group chaired by Ana Botín has also reduced its portfolio of doubtful debts, whilst its volume of mortgages has decreased by 3.4%. In fact, of the major entities that have published their data so far, Santander and Bankia are the ones that have reported the most significant decrease in financing.

Three banks, BBVA, CaixaBank and Ibercaja, have gone against the trend in the sector, suffering slight increases in their respective default rates. The first has been hurt by the incorporation of Catalunya Banc in April 2015, which is leading to an increase in its impairments, even through the operation to acquire the entity excluded the most harmful mortgages. They were transferred to a fund owned by Blackstone with certain government guarantees provided by the public rescue fund (Frob).

Despite the increases, CaixaBank and Ibercaja have two of the lowest default rates in the sector. In both cases, the default rate of home loans to individuals fell below 4% at the end of June this year.

For most entities, the volume of loans are falling at rate of less than 2%, as a consequence of the boost in new business and the open war to secure clients. At Unicaja, the decrease has been less than 1%.

Market share

BBVA is still the leader of this segment, with more than €89,437 million loans granted to households to buy a home, representing a market share of 17% (…). It is followed by CaixaBank, with financing lines amounting to €88,557 million (17%) and Bankia with €62,200 million (12%). Santander is ranked fourth, accounting for less than 10% of the mortgage market. (…).

The main entities have a combined balance of foreclosed homes amounting to more than €17,000 million. The bank that holds the largest portfolio of foreclosed homes is BBVA, with almost €4,500 million. CaixaBank is ranked in second place, with more than €2,762 million, whilst Bankia, in third place, has €2,700 million. (…).

Original story: El Economista (by Fernando Tadeo)

Translation: Carmel Drake

Sareb Has Returned €1,000M Assets To Banks

24 June 2016 – Expansión

In recent years, Sareb has found itself with an unexpected line of business as it works to slim down its balance sheet: it has been returning certain assets to the entities that transferred them to it initally. The company chaired by Jaime Echegoyen (pictured above) has returned more than €1,000 million in real estate assets and loans linked to the property sector to groups that transferred it the assets in the first place.

Those €1,000 million represent 2% of Sareb’s balance sheet upon creation – €50,781 million – and 13.5% of the total reduction in its asset value since 2012.

The assets have been returned due to information or appraisal deficiencies made by the transferring entities, at the time of transfer, between 2012 and 2013. Thus, some assets were transferred to Sareb with values that exceeded their real values and other should not have been transferred to the company at all, as they did not meet the requirements.

Financial sources consulted indicated that some personal loans were transferred to Sareb, which had nothing to do with the purpose of the company.

According to Sareb’s annual reports, corrections are made to asset purchase deeds “for the purposes of identifying the improper categorisation of assets, changes in the perimeter and errors or variations in the estimated valuation on the transfer date”.

Bond returns

With these properties and loans, the entities have returned €1,000 million in bonds that they received in exchange for their assets. (…).

Sareb was created at the end of 2012 from the assets of all of the entities that received public aid during the European bank rescue. Firstly, the banks controlled by the Frob – Bankia, Catalunya Banc, Banco de Valencia, NCG Banco and Banco Gallego – transferred their properties and developer loans, and then those entities that had received aid but not been nationalised –Liberbank, Caja 3 and Banco Ceiss, together with BMN– transferred their assets.

Of all of these entities, Catalunya Banc has received the most assets (in return) from Sareb over the last three and a half years. The entity absorbed by BBVA has now been returned €365 million in total, mainly between 2013 and 2014. CB is followed in the ranking by NCG Banco – now Abanca – with €182 million; Bankia with €168 million; and Banco de Valencia – purchased by CaixaBank – with €161 million.

By year, the most active period in terms of property and loan “adjustments” was 2014, when Sareb returned almost €550 million worth of assets to the entities. But the real estate company is still finding problems with the homes and loans that it was transferred, and this year it has already sent back assets worth almost €60 million to Liberbank, Bankia, Caja 3 and Banco Ceiss. (…).

A new tool

Recently, Sareb launched a new internal tool to help it handle all of the assets that it has on its balance sheet and expedite their transfer. It is called Atlas and it performs more than 300,000 valuations each year, automatically, cross checking market data with socio-economic indicators, such as rental income and population size in each place. (…).

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

The Banks Still Hold €77,250M Of Toxic Assets

13 June 2016 – El Mundo

The banks are still paying for the excessive risks that they assumed when they financed real estate operations virtually indiscriminately. Eight years after the burst of the real estate bubble, the default rate and volume of doubtful loans held by the top 12 banks have decreased, without exception.

Nevertheless, despite the balance sheet clean ups, the entities are still having to take on waves of land, buildings, homes and offices. By the end of 2015, the banks had absorbed €4,562 million more new foreclosed assets, which took the total volume of this toxic caption to €77,250 million. As such, they are having to take preventative measures and the recovery of their ordinary business is being hindered, according to a report prepared by Bankia’s research team.

The rescue of a sector in trouble may be hit by what is one of their major problems today. Since 2015, the recovery in prices and sales of the market that represents the main drag on the banks’ balance sheets is a relief for the sector because it allows the volume of sales of foreclosed assets to increase and at prices that are closer to the net values of the assets (which are discounted by the book value of the provisions recognised). This situation means that the banks will try to place significant portfolios of assets on the market over the next few months. The list of entities that are sounding out the wholesale market in search of buyers for their assets so far this year includes BBVA, Sabadell, Bankia, Popular…even Sareb, the so-called bad bank. (…).

Of the major Spanish entities to have survived the wave of mergers since 2010, BBVA is the one that held the highest volume of foreclosed assets at the end of 2015, with €16,138 million. Like in the case of Santander, that figure relates to property that the bank has had to take on in Spain and in the case of the group chaired by Francisco González, it is explained by the absorption of Catalunya Banc at the end of last year.

The entity created from the merger of the savings banks Catalunya, Tarragon and Manresa had already sold its portfolio of most problem mortgages to the investment fund Blackstone in April for €4,123 million (the portfolio had a nominal value of €6,000 million). Even so, BBVA is still, by far, the group that had to take on the highest volume of foreclosed assets in 2015: €2,385 million primarily land, which was 45% more than the second entity in the list, CaixaBank, which absorbed €1,634 million.

However, taking into account the recovery of the real estate market and the interest from investors, BBVA thinks that its exposure to toxic assets could be eliminated within a period of three years, as the group’s CEO, Carlos Torres, said in February. In this way, the asset digestion process could be entering its final phase, after a 2015 during which the entity sold around 21,080 foreclosed assets, 9% fewer than the year before, but with a significant increase in returns, which translated into capital gains of almost €120 million, compared with €17 million a year earlier.

At the other end of the spectrum are the entities that completed sales of assets to investment funds in 2015, which bought them at significant discounts. In this way, Kutxabank is the entity that liquidated its assets the quickest. Last year, it took a giant leap by reducing its volume of foreclosed assets by €1,503 million. In one of its major milestones, the bank created from the former Basque savings banks reached an agreement with Lone Star to transfer half of its real estate portfolio, held in the subsidiary Neinor, for €930 million and to grant a management contract for the other half.

Bankia, meanwhile, was the next entity that most reduced its foreclosed assets by the most, although its figures were much smaller than Kutxabanks, with sales of €352 million. (…).

Original story: El Mundo (by César Urrutia)

Translation: Carmel Drake

BBVA Reorganises Its “Bad Bank” After Key Director Leaves

6 June 2016 – Expansión

BBVA has put a new spin on the organisation of its bad bank. The entity chaired by Francisco González recently announced the disappearance of its problem assets division – Non Performing Assets – after agreeing the departure of its main Director and dividing up its functions between two other divisions, according to financial sources.

The Spanish group already reconfigured the division just over two years ago. Then, it handed over the task of accelerating the sale of problem assets to Pedro Urresti (pictured above), the Director who has now just left the entity as part of the reorganisation.

Urresti joined BBVA in 2006 from JPMorgan, where he had been responsible for Capital Markets in Spain and Portugal. At BBVA, where he replaced Carlos Pertego – the current Director of Goldman Sachs – he led the Financial Management and Investor Relations department until 2011, when González put him in charge of problem assets.

Following the dissolution of that area and the departure of Urresti, BBVA has chosen to divide its functions and share them out between two divisions. On the one hand, everything relating to real estate assets will be transferred to BBVA Real Estate – the unit in which Anida sits – led by Agustín Vidal-Aragón. On the other hand, the activity relating to the sale of debt portfolios will be transferred to Javier Rodríguez Soler, the bank’s Director of Strategy and M&A.

Reinforcement

Rodríguez Soler was one of the Directors who’s profile increased following the reorganisation of the management team performed by González last year, when he appointed Carlos Torres as the new CEO, to replace Ángel Cano. The Head of M&A, who until then had reported to the Finance Director, Jaime Sáenz de Tejada, went on to lead his own division, reporting directly to the President.

As a result of the new changes, BBVA hopes to accelerate the sale of its real estate assets, whose balance barely decreased last year, due to the takeover of Catalunya Banc.

During the two and a half years that Urresti has been in charge of the problem assets division, BBVA has been one of the least active large Spanish entities in the sale of portfolios, and has barely transferred any portfolios of loans or homes.

Meanwhile, other financial groups such as CaixaBank, Sabadell and Bankia have taken advantage of the improvement in the market to sell €17,000 million worth of non-strategic assets.

Furthermore, the entity has not sought to make any alliances in the sector through the sale of part or all of its real estate arm, like other entities did, including Santander, CaixaBank, Bankia, Sabadell and Popular, amongst others. It did consider selling off its collections business and it appointed KPMG to coordinate that sale, but it ended up pulling out.

According to financial sources, this strategy means that the sales rate of its real estate assets is slower, but the bank would benefit in the event of a faster than expected economic recovery, as it would obtain more in return for its properties and real estate collateral. Nevertheless, the risk still exists that the opposite may happen.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Blackstone Buys 4,500 Rental Homes From Sabadell

13 January 2016 – Expansión

Blackstone has won one of the largest ever real estate auctions and it did so during the final days of 2015. A few weeks ago, the US fund completed the acquisition of 4,500 rental homes from Banco Sabadell, according to financial sources consulted by Expansión.

This represents the largest block sale of homes by a Spanish bank in recent years, given that the sale is still pending of two larger portfolios that Bankia and Ibercaja have put on the market.

The latest operation, which forms part of Project Empire, has now been signed by both parties; a few conditions precedent are still outstanding, but they are expected to be resolved within the next few weeks. Given that the agreement was actually reached in 2015, it will be accounted for within last year’s results, which Banco Sabadell will announce on 29 January.

The portfolio was initially valued at around €600 million, however, after it was first put on the market, the number of flats included in the portfolio decreased from 5,000 to 4,500 (bringing the valuation down to €540 million). The interested funds had been demanding discounts of between 40% and 70% for banks’ portfolios of homes, on the basis of the quality of the assets. In the case of Project Empire, since the homes in the portfolio are all rented out, the price obtained by Sabadell could have been higher, given that Blackstone will obtain regular rental income, as well as taking ownership of the assets.

Firm commitment

This purchase strengthens the US fund’s position in Spain, whose senior advisor is Claudio Boada. The homes will be managed by Blackstone’s real estate subsidiary, Anticipa, the entity formerly known as CatalunyaCaixa Inmobiliaria, led by Eduard Mendiluce. In addition, the fund has three other subsidiaries in Spain, which also manage property investments, namely: Fidere, which focuses on homes for rent (many of which are social housing properties); Logicor, which concentrates on the logistics asset segment; and Multi Development, which specialises in shopping centres.

Blackstone completed its largest ever investment in Spain last year, with the purchase of 40,000 mortgages from Catalunya Banc, worth €6,400 million for €3,600 million. Anticipa manages that portfolio, together with a few others acquired from entities such as CaixaBank, taking the entity’s total assets under management to €10,000 million.

Another one of the most active investors in Spain in recent months has been Oaktree, which competed against Blackstone to take over Sabadell’s portfolio.

For the Catalan entity, this operation allows it to continue improving the quality of its balance sheet through the sale of non-performing assets. Sabadell has reduced the volume of problem assets on its balance sheet by €3,500 million since the start of 2014 ,to €22,350 million at the end of September 2015.

In addition to Project Empire, Sabadell sold other portfolios last year to investors such as Pimco, Aiqon and Sankaty. Altogether, it transferred assets worth €2,400 million to those funds in 2015.

Original story: Expansión (by J. Zuloaga/S. Saborit)

Translation: Carmel Drake

GE Finalises The Sale Of Its Banking Business In Spain

16 December 2015 – Expansión

GE Capital Bank is finalising its exit from Spain. The financial subsidiary of the US multi-national is holding negotiations with several investors to sell its entire loan business in the country. According to various financial sources, the business is primarily mortgage based and has a volume of almost €600 million.

The multi-national company has engaged PwC to manage this operation, known as Project Zágato.

There are three key candidates on the list to take over GE Capital’s portfolio, namely: Blackstone, which has experience in the management of banking mortgages after its acquisition of Catalunya Banc’s loans; Oaktree, which closed a similar operation with Bankia earlier in the year; and Evo Banco, owned by Apollo, which is looking to grow its assets through this type of portfolio, like it did with a portfolio from Citi in April.

The mortgages that GE Capital has put up for sale have a default ratio of 30% and the majority come from loans that the US entity granted through APIs (real estate agents).

The Australian fund Pepper Group is currently managing the portfolio. The other businesses that the Group has in Spain, mainly consumer financing, have been maturing in recent months.

GE Capital’s exit from Spain comes in response to a change in the multi-national company’s strategy at the global level. At the beginning of the year, the US group decided to divest the majority of its financial activity to focus on its industrial business involving turbines, aircraft engines and medical equipment, amongst others. At the time, the group had financial assets amounting to $500,000 million (€455,000 million).

Strategic shift

The multi-national took this decision due to the commercial risk that the financial arm of its business represented when the financial crisis hit in 2008, despite the fact that it generated half of the group’s profits.

Since then, GE Capital has been selling off parts of its business through agreements such as the one reached with Wells Fargo in October, for the transfer of assets amounting to $32,000 million. Just over a year ago, when its financial unit had not yet been dismantled, it sold part of its consumer business in Sweden, Norway and Denmark to Santander, for €700 million.

The group began to withdraw from Spain at the beginning of 2015, when it delisted itself from the Spanish banking register. At the time, it had negative reserves of €220 million as a result of the losses accumulated over several years, due to its high default rate.

The entity first started recording losses in 2008 with €13.6 million and did not manage to emerge from the red until 2014, when it recorded profits of €53 million.

At the end of 2014, GE Capital Bank held assets worth €524 million, according to data from the AEB.

Before the outbreak of the crisis, GE Capital had partnerships in Spain with CAM and BBK.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake