Tag: corporate operation

TPG & CaixaBank Hire Cerberus Director To Lead Servihabitat

3 November 2017 – Voz Pópuli

The times are changing at Servihabitat, the real estate arm of CaixaBank and one of the largest servicers in Spain. The platform, which is owned by the fund TPG (51%) and the Catalan bank (49%), has appointed a new board of directors after Julián Cabanillas’ decision to leave the firm; he had served as CEO until now.

The historical director of La Caixa has decided to step down after fulfilling the term that he had committed to undertake with the bank and the US fund. According to financial sources consulted by Voz Pópuli, Servihabiat has hired one of the key directors at Cerberus in Spain to replace him: Iheb Naffa, the CEO of Gescobro until now.

For more than a decade, Nafaa was one of the directors of the financial arm of General Electric (GE Capital) in Spain, serving in roles such as the Director of Risks, Director of Operations and Director General. Gescobro hired him in 2015, at the same time as that firm was acquired by Cerberus.

Nafaa will have another former director of General Electric as one of his right-hand men at Servihabitat, namely, Edelweiss Obiol, with whom he worked at the US company. Obiol replaces Feliu Formosa, another former La Caixa director who is leaving Servihabitat,  as Finance Director.

McKinsey and Oliver Wyman

The changes in Servihabitat’s leadership come at a time when the real estate company is carrying out a significant internal review. To this end, it has engaged two consultancy firms: McKinsey and Oliver Wyman. Sources consulted explain that these two firms are focusing on improving the real estate company’s internal processes, rather than on involving it in a merger or sale.

One possible corporate operation has been flying over Servihabitat for years. Conversations were even held with the private equity group Investindustrial last year. Various options have been explored, ranging from CaixaBank’s repurchase of TPG’s stake to then look for another operation, or for the fund to sell its 51% stake itself.

All indications are that changes may be afoot in 2018, in the face of the more than likely consolidation of the servicer market. Cerberus, where Nafaa is moving from, Apollo and Blackstone are all lining themselves up as possible buyers.

Servihabitat manages assets worth almost €50,000 million, according to figures as at 2016. They are mainly owned by CaixaBank and Sareb, and so they are not held on its balance sheet. The firm is mainly dedicated to administering the debt and assets and selling them. In 2016, it recorded total sales of €1,645 million. And between January and September of this year, it recorded turnover of €1,300 million, up by 17% compared to the same period last year.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Popular Seeks To Restore Credibility By Re-Appraising Its 40,000 RE Assets

9 May 2017 – Expansión

Before the summer, the top executives of Banco Popular will have answers to the two questions that the President of the bank, Emilio Saracho, said were essential to resolve in order to define the bank’s future, namely: What are the requirements for new provisions? and Which path should the entity follow to achieve the minimum regulatory capital requirements that the supervisory authorities are going to demand of it from 1 January 2019 onwards? According to the CEO of the bank, Ignacio Sánchez-Asián, speaking at the presentation of the Q1 results, Popular is currently a long way from achieving those requirements.

Popular is conducting a complete review of the valuation of the 40,000 real estate assets that feature on its balance sheet, which have a combined gross value of just over €36,000 million. The existing provisions have to be deducted from that amount, and they represent around 45% of the book value. According to Sánchez-Asiaín, once the review, which will take several weeks, has been completed, the entity will have to publish the amount of provisions that it considers still have to be recognised on an extraordinary basis. And then, Management will be able to calculate the capital requirements needed to meet those provisions and to place the entity at the required levels in terms of own funds.

However, the situation is not easy because, according to the CEO, as a result of the new appraisals carried out by the independent experts of an unquantified number of the c. 40,000 assets, the bank has already had to recognise unforeseen provisions in the first quarter amounting to €310 million, to increase the coverage of the assets re-appraised so far.

Restoring credibility

The bank does not want to give specific figures about the scope of the new provisions, so as not to create expectations that it then is unable to fulfil because, according to its CEO, the entity’s key priority is to restore its credibility in the market (…).

Sánchez-Asiaín acknowledges that the bank “will have capital requirements in the future”, whose final quantification will depend on the performance of the traditional business, which worsened during the first quarter of this year compared to a year ago; it will also have provision requirements, which the entity’s operating profit will not cover, and it also plans to sell non-strategic assets, which it may carry out this year. “Whether or not we manage to sell the assets will depend on the prices being offered”, said Sánchez-Asiaín.

Capital increase

The fact that the bank is going to need capital is unquestionable because, at the moment, its CET1 does not amount to 8% even at full load, and that percentage will be significantly higher as of 1 January 2019. As such, even if the bank substantially improves its turnover and sells everything that it can, it will not reach that figure by itself. For this reason, at the General Shareholders’ Meeting, Saracho said that there will be a capital increase or a corporate operation or a combination of both (in the near future).

The CEO said that “investors are asking about the capital increase”, and he added that, in his personal opinion and if there is an increase in the end, then it should be aimed at institutional investors “to have credibility in the market”. Does that mean that there will not be a retail tranche? He failed to answer that question.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake