Sabadell Puts €1,300M NPL Portfolio Up For Sale

20 April 2016 – Expansión

Sabadell has become the most determined Spanish entity when it comes to trying to clean up its balance sheet. The entity chaired by Josep Oliu (pictured above) has two portfolios up for sale through which it hopes to sell off €1,300 million of non-performing assets. Moreover, it may soon add another €1,700 million portfolio, if a large deal that the entity is currently preparing eventually goes up for sale. In total, €3,000 million, of which €2,200 million comprises doubtful loans linked to real estate developments, and which represent around one sixth of its doubtful assets in Spain. The remainder, €800 million, relate to non-performing consumer loans.

The latest divestment to come onto the market is Project Pirene, advised by KPMG, containing €460 million of problem assets linked to property developers, according to sources consulted at international funds. Unlike some of its recent operations, this one originates from Sabadell’s own business, and not from CAM, Caixa Penedès or Banco Gallego.

This operation combines Project Corus, with €800 million non-performing consumer loans; and Project Normandy, under assessment, with €1,700 million non-performing real estate loans, according to El Confidencial.

The Catalan group hopes to close the first two operations within the next two months, so that they may be accounted for in its financial statements for the first half of the year. Meanwhile, Project Normandy may be delayed somewhat due to its large size. In fact, the operation would be one of the largest seen in Spain in recent years. The largest, Project Big Bang, containing €4,800 million in foreclosed assets, was suspended by Bankia due to its complexity and the large discounts being demanded by the funds.

Sabadell was one of the Spanish entities that reduced its default rate by the most during 2015. Following the purchase of the British bank TSB, its default rate fell by almost five percentage points. If we exclude that acquisition, the rate fell by almost three percentage points, from 12.74% to 9.86%. In total, the entity manages €21,500 million of problem assets, with a coverage ratio of 53% for its doubtful debts and of 44% for its real estate assets.

Besides these operations launched by Sabadell, only a handful of other entities have decided to divest their problem assets so far in 2016, namely Cajamar, Bankia and BBVA. Popular announced that it would be very active, but it has not yet put any portfolios on the market.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Ibercaja Sells €210M NPL Portfolio To Seer Capital

6 July 2015 – Expansión

On Friday, Ibercaja closed the sale of a portfolio of non-performing loans, worth €210 million, to the US fund Seer Capital. The operation generated gross profits of almost €10 million for the Aragonese entity.

The portfolio contained doubtful unsecured loans, which were all fully provisioned, as well as non-performing loans.

Like other institutions, Ibercaja has accelerated the sale of problematic loans in recent years to devote its resources to productive assets and obtain profits on loans that it has already written off.

Ibercaja sold a similar portfolio in 2013, worth €540 million, to the US fund Yorvik and Savier Asset Management, owned by Javier Botín.

This is the first transaction that Seer Capital has undertaken in Spain. The fund was created in 2008 by Philip Weingord, former director of Deutsche Bank. The US firm manages assets worth €1,806 million, including mortgages, syndicated loans, SME loans and consumer finance with some kind of default (non-payment).

Other divestments

Moreover, Ibercaja Banco has refocused its strategy in recent months to take on a more active role in the market. Thus, the entity has engaged KPMG as an external advisor to perform the preparatory work towards an IPO in the coming years. The entity has until the end of 2018 to list on the stock exchange and so it has recently begun to explore that option in more detail.

In addition, a few weeks ago, the entity began a process to transfer the majority of the properties on its balance sheet. In total, the Aragonese group has put €800 million of foreclosed assets up for sale, including 6,900 residential units; 1,300 commercial premises and industrial buildings; and 600 plots of land. The transaction, known as Project Kite, is being advised by N+1.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake