Liberbank Accelerates Sale Of Its RE Arm For €80M

20 July 2017 – Voz Pópuli

A defensive operation by Liberbank. The Asturian entity is accelerating the sale of its real estate company Mihabitans to strengthen its capital, according to financial sources consulted by Vozpópuli. The group led by Manuel Menéndez (pictured above), which declined to make comments, had been considering this possibility for months but has decided to fire the starting gun now, when the market’s focus has been placed on the entity. The prices being considered for this sale come in at just over €80 million.

The operation has been underway for several months under the watch of Alantra (formerly N+1). The subsidiary up for sale is Mihabitans Cartera, which Liberbank created in June last year. This company is responsible for managing the financial group’s homes and real estate debt. Liberbank has transferred some of its staff to the new entity. Its CEO is Víctor Sánchez, the Director that Menéndez entrusted to sort out the property portfolio at CCM following its purchase.

This sale, known in the market as Project Pipe, includes only the management of the real estate assets, a priori, and not their ownership. The idea is that it will take a similar form to the operation carried out by Santander with Altamira when Apollo purchased an 85% stake of that entity; as well as CaixaBank with Servihabitat, which is now controlled by TPG; and Popular with Aliseda.

According to the same sources, the process is in an advanced phase and several candidates have been selected to submit binding offers. The candidates include Lindorff, owner of Aktua; and Haya Real Estate, owned by Cerberus.

Crucial moment

These types of operations are undertaken to generate capital gains and strengthen capital. Given that they only manage properties, companies such as Mihabitans do not have any assets of their own other than their employees and the contract with the bank(s) that own(s) the properties. Depending on the contract agreed, the price may be higher or lower. In this way, Popular obtained around €700 million for Aliseda and Santander received €664 million for Altamira.

This sale comes at a key moment for Liberbank. Following the termination of CCM’s asset protection scheme (EPA), the group’s default rate soared in the last quarter and its capital decreased to 12%, above the levels required. Nevertheless, it is considering several options, such as the deal involving Mihabitans to strengthen itself and calm the market (…).

Liberbank has been compared to the entity that is now in the hands of Santander (Popular) in terms of its default rate, which in the case of the former amounted to 13% at the end of March. The objective is to bring it down below 7% within a year and a half. The entity had accumulated €2,951 million in doubtful debt and €2,414 million in foreclosed assets as at March, with a coverage (over the latter) of 40%. The sale of homes, which Mihabitans is responsible for, reached historical highs in the first quarter of €56 million (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Liberbank Puts €200M Mortgage Portfolio Up For Sale

16 November 2016 – Voz Populi

Liberbank’s sole objective right now is to reduce its default rate. The entity led by Manuel Menéndez is working around the clock to try to control its default rate, which will soar from 8.8% to more than 16% on 1 January 2017. For this reason, it has just launched the sale of its first portfolio in the last two years aimed at large investors.

This situation has arisen because the programme of guarantees that it received in exchange for acquiring the state-intervened bank CCM is coming to an end. Until now, none of the problem assets from the Manchegan savings bank have been consolidated into Liberbank’s balance sheet, but they will be from next year.

The entity born out of the mergers between Cajastur, Caja Cantabria and Caja Extremadura, and the purchase of CCM, has put its retail network into full swing to try and sell the maximum number of homes possible. In addition, Liberbank will now focus on the sale of portfolios to large international investors.

The first portfolio to come onto the market is known as Project Fox, containing between €150 million and €200 million in unpaid mortgages, according to financial sources. It is not the first entity to sell loans granted to individuals to buy homes; Bankia and Deutsche Bank España have also done the same recently.

Liberbank will try and close Project Fox before the end of the year, although it would not be a problem if the sale gets pushed back to Q1 2017. That is because the final year end accounts that the entity presents for 2016 as a whole, will still benefit from the cushion of CCM’s asset protection scheme (EPA) to decrease the default rate. The accounts that it publishes in March will be the first to reflect the new situation without the aid.

Several portfolios

At least one or two other portfolios will be put on the market alongside Project Fox over the next few weeks. According to several financial sources, one will contain non-performing loans (to SMEs and consumers) amounting to several hundreds of millions of euros. In total, all of the divestments that the financial group is putting on the market during the final stretch of 2016 will exceed €500 million.

Liberbank’s aim is to stabilise its default rate at less than 15% by the beginning of 2017. The entity has not ruled out participating in a major operation next year, to allow it to return to normality in terms of its doubtful and foreclosed assets, primarily by getting rid of its properties in Castilla-La Mancha.

The pressure on the entity is growing, given that both the Bank of Spain and the European Central Bank (ECB) are focusing on provisions, in the face of the new domestic accounting circular and the entry into force in 2018 of new international regulations, which will change the rules of the game.

These are not the first portfolio sales undertaken by Liberbank. It sold a non-performing portfolio to Cerberus in 2013 and another non-performing portfolio to JB Capital Markets in 2015. In addition, it negotiated the sale of its doubtful debt recovery platform to Lindorff and Cerberus in 2014, although the operation did not go ahead in the end after it failed to get approved by the Board of Directors.

Original story: Voz Populi (by Jorge Zuloaga)

Translation: Carmel Drake

Liberbank Puts Building On c/San Jerónimo Up For Sale

13 September 2016 – El Confidencial

Liberbank has decided to cash in one of the gems that it inherited from the former Caja Castilla-La Mancha (CCM), specifically: the building located at number 19 on the sought-after Carrera de San Jerónimo. It is a modern, 5-storey building, with a ground floor, terrace and parking area, which was fully renovated less than a decade ago; and it is located just a stone’s throw away from Palacio de las Cortes, right in the heart of Madrid.

In financial circles, it has always been said that this building was a personal whim of Juan Pedro Hernández-Moltó, who, after leaving the Congress of Representatives and taking over the reins at CCM, saw an opportunity to unit his two passions in this property, which was completely remodelled in 2007, just two years before the Manchego entity was intervened by the Bank of Spain and sold to Cajastur, from which the current Liberbank emerged.

Faced with these trappings from the past, the entity led by Manuel Menéndez is now immersed in an asset sale process, which includes an open process to sell this headquarters building, which has a total surface area of 2,500 sqm and which may fetch up to €13 million upon sale, according to sources familiar with the process.

In addition, the decision to put this property up for sale comes a year and a half after Liberbank acquired a complex of office buildings measuring 13,500 sqm from Sareb in Fuente Mora, number 2, in the area known as Manoteras, which is close to the headquarters of companies such as Axa, Caser and BBVA’s Ciudad Financiera. (…).

Although initially, the group was considering the possibility of holding onto the headquarters on Carrera de San Jerónimo for its President and institutional work, the roadmap that the entity is now working with involves transferring all of its offices in Madrid to the new offices in Manoteras, and leaving the building free for the new purchaser to fill with its own tenant.

Sales plans

At the presentation of its latest quarterly results, Liberbank acknowledged that its priority now is to sell off as many of its non-performing assets as possible this year, given that the EPA (asset protection scheme) that it was granted by the State to cover it against potential losses in CCM will come to an end on 31 December 2016.

The hole inherited from the Manchego entity currently amounts to €2,000 million, whereas the cushion from the EPA barely amounts to €456 million. Its divestment strategy also includes trying to sell a portfolio of overdue mortgages amounting to between €700 million and €800 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake