26 May 2015
Entities such as Bankia, CaixaBank, Sabadell, BMN, Santander and Bankinter are selling mortgage debt portfolios, foreclosed assets, loans to developers and bad debt.
In recent weeks, Spanish banks have inundated the market with portfolios full of troubled assets. The entities have contacted international funds to transfer unpaid debt and foreclosed assets worth 10 billion euros, according to financial sources consulted by the Expansión magazine.
The aim of the Spanish financial groups is to get rid of non-performing assets (NPAs) to make way for provisions, reduce default rates, allocate their resources to new credit and increase profitability.
The transactions contain a much larger real estate component than a few years ago, as the level of provisions in this segment has reached a point where banks can agree on prices with funds without registering new losses.
The most active financial institution has been Bankia, which has revolutionized the market with the so-called ‘Big Bang project’, with which it plans to sell all foreclosed assets that remained on its balance sheet after the transfer to Sareb. In total, it has placed for sale 38,000 residential units (apartments, garages and storage rooms), worth 4.8 billion.
Along with this operation, which some competitors could replicate this year, Bankia was also the first to bring to market a portfolio of outstanding mortgage loans, within its ‘Wind Project’. This operation is in the final stage, awaiting binding bids in June. The portfolio consists of 4,300 mortgage loans with a nominal value of 900 million.
CaixaBank and Banco Sabadell are among the most active financial institutions, mainly due to their aim to clean up their balance sheets after years of strong inorganic growth in Spain based on mergers and acquisitions: CaixaBank with Banca Cívica, Banco de Valencia and now Barclays; Sabadell with CAM, Lloyds, Guipuzcoano, Banco Gallego and Caixa Penedès.
Along the same lines, CaixaBank has recently contacted funds to offer two possible deals: the Tourmalet Project, with 800 million in loans to developers, which could be the largest sale of a portfolio of this type so far in Spain; and the ‘More Project’ with 780 million in bad loans.
Meanwhile, Sabadell has started getting rid of 5,000 flats for lease, valued at 600 million euros, as part of its Empire Project. This entity has already sold two portfolios throughout 2015: the Project Auster – 800 million in defaulted loans, which were sold to the Aiqon fund; and the Cadi Project – 240 million in developer credit, which went to Pimco and Finsolutia.
Albeit on a smaller scale, Santander, BMN and Bankinter have also placed portfolios for sale on the market. Santander, headed by Ana Botin, wants to transfer 170 million in hotel debt through the Formentera Project.
BMN has launched two projects: one with 160 million in bad loans, some mortgages – Project Pampa; and another with 100 million in apartments – Coronas.
Bankinter has recently announced the sale of a portfolio of 300 flats valued at 60 million.
Among the funds most interested in the new portfolios, highlighted are those who have purchased platforms such as Apollo (Altamira), Cerberus (Haya Real Estate), Centerbridge (Aktua), Blackstone (Anticipa) and Lone Star (Neinor). Other funds such as Oaktree and Sankaty are also breaking in quite strongly.
Translation: James Leahu