Sabadell Places €1,000M In 10-Year Mortgage Bonds

20 April 2017 – Expansión

It has taken Sabadell just four months to debut on the debt market this year. Yesterday, it completed the placement of €1,000 million in mortgage bonds with a maturity of 10 years, to leave Popular as the only entity that, given the uncertainty surrounding its specific situation, has not resorted to the capital markets to raise finance or secure resources for its capital buffer.

For these bonds, Sabadell is offering a coupon of 1%, in other words, 33 basis points above the mid-swap rate, the reference rate for issuances of fixed income securities in euros. The mortgage bonds are the safest debt that an entity can issue, given that, in Spain, they are guaranteed by all of the mortgage loans of the issuing bank, which serve as collateral in the event of bankruptcy. There has never been a default of this kind in Spain.

To carry out the operation, Sabadell has received help from Barclays, Commerzbank, Crédit Agricole, Lloyds and Natixis, as well as from its own investment banking team. Demand for the bond issue amounted to €2,400 million, in other words, more than twice the amount awarded.

Santander Totta

Meanwhile, Santander Totta, the Portuguese subsidiary of Santander, launched an order yesterday to place 7- and 10-year mortgage bonds. According to sources in the market, the operation will close tomorrow and will serve to raise cheap financing. Besides Santander, the following entities are participating in that operation: Unicredit, Deutsche Bank and Société Générale.

Original story: Expansión (by A. Stumpf)

Translation: Carmel Drake

The Banks’ Average Default Ratio Drops To 10.66% In Sept

19 November 2015 – Expansión

Improving trend / The banks’ average default ratio dropped to 10.66% in September, its lowest level since 2013. Bankinter has the lowest default rate (4.35%).

The default rate of Spain’s banks continues to fall, mainly thanks to a decrease in the number of loans going into default, an increase in recoveries and sales of non-performing portfolios.

The latest statistics, as at September, show that the default ratio amounted to 10.66%, its lowest level since March 2013. Moreover, there was a small month-on-month recovery in total lending, which boosted the trend.

The decrease is the result of two factors, which are pushing in the same direction: a decrease in doubtful debts and a slight recovery in overall lending. Doubtful loans decreased by just over €3,000 million in September, to amount to €141,267 million. This represents a YoY decrease of 21%. In parallel, loans granted by banks, savings banks and other financial entities increased by €7,529 million during the month, to €1.325 billion, which led to an almost 1 basis point reduction in the YoY rate of decline, to 3.29%.

This trend is a reflection of what is happening in the vast majority of entities. But, clearly, the situation is different for each bank.

Based on the data as at September for the country’s main financial institutions, eight had a default ratio below the average rate and four had a default ratio that exceeded it.

Bankinter stands out as the bank with the lowest default ratio in Spain, with a difference of 6.3 percentage points compared with the average for the sector (10.66%).

Thanks to its prudent strategy in the real estate sector during the boom years, the entity led by María Dolores Dancausa maintained its position as the bank with the lowest default ratio for the entire duration of the crisis.

CaixaBank is ranked in second place, although it sits a long way behind Bankinter. The Catalan bank had a default ratio of 8.7% in September, having reduced its ratio by almost 2 points in the last year. It is followed by Kutxabank, another entity that has been noted for its robustness, during a period when the vast majority of the savings banks suffered from the ravages of the burst of the RE bubble.

Spain’s two largest banks, Santander and BBVA, have exactly the same default ratio: 9.5%, based on the data supplied by the entities to Expansión. (…). Therefore, both banks have a default rate that is one percentage point below the average ratio for the sector.

Ibercaja Banco, the former Aragonese savings bank, which took control of the Caja3 group, also sits slightly above the average. Finally, Sabadell and Liberbank’s ratios are also above average, although in both cases, the ratios do not include the assets covered by their respective Asset Protection Schemes, granted when they acquired CAM and CCM, respectively.

Original story: Expansión (by Michela Romani)

Translation: Carmel Drake

Spanish Banks’ NPL Ratio Falls to 12.9% in October

18/12/2014 – Invertia

According to the provisional data published by the Bank of Spain today, the total value of soured loans dropped to 178.38 billion euros, levelling out to June 2013.

The default rate links seven consecutive months of decline, however it is not so visible as the current credit balance shrank by 0.43%. Precisely, the sector’s overall credit registered in October showed by 6.01 billion euros less than in September.

Not taking into account the recent methodological changes, the non-performing loan rate would stand at 13.16%, down from the previous month’s 1.38 billion euros to 1.35 billion.

The default dipped down in December 2012 and February 2013 as a result of accounting changes after the bad bank of Spain received toxic asset transfers from main entites (Bankia, NCG Banco, Catalunya Caixa, Ceiss, BMN and Caja3) in two phases.

The financial entities maintain their provisions, although there have been some cuts in October bringing them down to 105.74 billion euros. In September, it showed an amount of 106.67 billion.

Progressive Fall to 10% Forecasted For 2015

Antonio Marcos, an analyst at XTB, estimates that the rate will sit at 10% in 2015 due to reduction in non-payment and an increase in lending to companies and families.

Original story: Invertia

Translation: AURA REE

16.6% of REO Assets to Remain ‘Toxic’ For Next Two Years

18/11/2014 – El Economista

Neither good score given at the ECB’s stress test, nor economical recovery can guarantee easier years for the Spanish banks. Their toxic real estate load, still far from being digested, is said to represent 16.6% of all damaged assets in their balance sheets after two years pass.

The outlook given by Analistas Financieros Internacionales (AFI) is even more pessimistic (18.7%) for the end of 2014. This will not permit the sector to turn the page or to relax the debt collection efforts.

Net defaulting inflow has screeched but new credit, as AFI forecasts, will be not enough to pick the financed stock up and dilute the damaged transactions volume over the outstanding loan.

According to Spain’s central bank, non-performing loans hit highest at the end of 2013 amounting to €191.78 billion and from that point on, decreasing to a nearly €178.69 billion in August (the latest data available). The downward path is marked by less non-payment reporting, better REO property and portfolio sales, once the latter product healthier. However, the load corresponds to an insolvency rate before the supervisory entity ruled reclassification of a €27 billion worth of toxic assets in summer 2013.

Default Rate at 10%

Default in Spanish banks persistently hits over 13% and experts from AFI fear the rate will continue to show around 10% throughout the next two years. If the repossessed property deriving from totally delinquent loans added up, the rate would jump to 16.6%. Green sprouts of upgrade first will root in companies, for which the firm foresees a drop in insolvency from 11.8 to 7.8%, as well as in consumer credit supposed to decline from 11.6 to 8.4%. The least is expected from the housing sector with index falling from 5.5% to 5.2%.

Both default level and the necessity to increase profitability, urge the sector to offer better-priced loans. AFI specialists say a sufficient flow will not be seen before 2016. Banks are more optimistic and state it will in 2o15.

The advance will be progressive and conditioned by customers and product lines. A mere 0.2% refinement is expected in the two years. Efforts turn in case of financing SMEs and consumers where average rates calculated by the Bank of Spain showed 4.54 and 9.87% APR in September respectively, and 3.10% for mortgages. Also, AFI claims new loan approvals will exceed repayments still this year, however it will not happen with mortgages in less than two years.

Deposits at 0.7%

Good news for the banks is that deposits cheapen and post 0.7% but margins’ capability narrows. The situation offers some room to improve balance reporting, above all in 2015, thanks to potential savings on the REO portfolio price adjustment liability, currently repaid 1.64%.

Still, Return on Equity (ROE) is bound to grow 7% within two years, when the bankers expect it to get back to normal (i.e. above 4.2% registered in 2013), although much below the 15% from the pre-recession times.


Original article: El Economista (by E. C.)

Translation: AURA REE

Default on Land Loans Hits a Record High

17/10/2014 – Expansion

Default rate on mortgages for land purchase showed 10.1% in June, meaning a huge leap since the beginning of the recession when it was close to 0%, informs the Spanish Mortgage Association (abbreviated to AHE by its name in this language).

The data also indicates that the rate on land acquisition for home construction was 7.1% in 2013 and 5% in 2012.

In comparison with the loans granted for property purchase (6.1%) or renovation (7.3%), default on land posts much higher.

When it comes to lending institutions, banks and savings banks registered an 11.1% rate, while cooperative entities a 4% default.

The figures go along with construction loan perfomance which marked 33.3% at the end of the first half of the year, also hitting a record highest.

However, the statistics contrasts with rise in land prices by 3.5% in the second quarter of 2014 over the first quarter of the year, and presently a square meter costs €146.4, the Ministry of Public Works reports.

This period of time (Q2) also saw a rebound in the transferred area volume which amounted to 5.6 million square meters sold for a total of €547.2 million.


Original article: Expansión

Translation: AURA REE

Credit Balance Down to 2005 Levels, While Default Stagnates at 13.5%

21/07/2014 – Expansion

In May, the credits granted to Spanish families and firms by banks, cooperatives and financial institutions continued to shrink. For the first time since 2005, the balance diminished from €1.400 billion to €1.390 billion, by 11.5 billion less than a month earlier. On the year-on-year basis, the fall in loans stands at 6.6%, according the the data published by Spain´s central bank.

Also, the default in banks went down by €2.3 billion to €187.9 billion. The obtained rate declined by only 5 bps and post 13.45%. If entities of other type included, it marks 13.39%.

In depository institutions, the rate marks 13.522%, whereas in the financial ones it stands at 10.795%.


Original article: Expansión (by M. Romani)

Translation: AURA REE