Catalunya Banc Goes to BBVA For €1.13 Bn

23/07/2014 – Cinco Dias

Neither Santander, nor La Caixa. We officially got to know the winner of the bidding for Catalunya Banc. BBVA paid €1.13 billion for 98.4% of the nationalized bank (the amount for 100% would have risen to €1.19 bn). With the operation, the entity raises its market share in Catalonia from 12.3% to 24.9% and takes “the bank number 1” position in Spain.

Moreover, with the purchase BBVA grabbed 3.5 billion state-backed tax credits, 3.6 million clients and 715 branches of the nationalized bank. As another perk, the Fund for Banking Restructuring (known as FROB) pledged to bear the cost of claims on preferrent shares, abusive clauses, swaps and the possible compensation for Mapfre in case of the contract breach. In total, the Fund will pay over €400 million.

The Frob writes-off the €11.5 billion out of the total €13.6 billion state bail-out granted to Catalunya Banc. The amount also includes the €572 million aid given to Blackstone when the fund purchased the soured loan portfolio from the enity a week ago.

Perhaps the Spanish Government believed in the saying “third time lucky” as the two previous attempts to offload Catalunya Banc ended up in failure.

BBVA outbidded sure-bet Santander and La Caixa, whereas Societe Generale finally did not submit any offer. The “blue bank” had bought nationalized Catalonian entity Unnim for just one Euro in 2012. Catalunya Banc was the last bank for sale in hands of the State as Bankia and BMN have got their own plans based on selling-out shares.


Original article: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: AURA REE

Frob Hopes to Receive Four Bids & Recover the €572 Mn Assistance

18/07/2014 – Expansion

The moment of truth for the auction of Catalunya Banc is approaching. Today, the Fund for Orderly Banking Restructuring, known as the Frob in Spain, expects at least four binding offers for the nationalized entity. This Fund and Spain´s Deposit Guarantee Fund (FGD by its acronym in Spanish) hold together 98% of the Catalonian bank.

The public Fund will grant new State guarantees for the purchase but any type of the Asset Protection Scheme is ruled out.

In the sector, it is thought that Santander and CaixaBank will bid the highest, next to Societe Generale and BBVA that will also take part in the auction.

Once the bids laid on the Frob´s table, the Fund will examine them and make the decision on Monday or Tuesday. Unless the best bid hits €200 million and is by 50% higher than the second, the second round will take place two days later and the final winner would be known at the end of the next week.

The Frob estimates that the new guarantees provided for the buyer will be very similar to the ones at the sale of NCG Banco. They had a €1 billion cap and were expected to bring an over €270 loss.

The potential purchaser of Catalunya Banc may ask for a risk coverage, involving legal costs invoked by swaps, minimum clauses and prime rates, as well as early termination of agreement with insurance banks.

Catalunya Banc had previously received a €12 billion bail-out which pushed it into nationalization. The guarantees are also ought to be added to the €572 million support the Frob gave to the sale of distressed mortgages to Blackstone. The Fund hopes to recover the amount, although the “Hercules” will pull the equity from it when it starts to fall into damage.

The transaction is said to be “magnificent”  as without its success, Catalunya Banc could have faced liquidation from the part of Brussels, if the bidders asked for more public aids. “There was a certain risk”, sources from the Fund say, “but now we expect to obtain a good price”.

Moreover, the same sources assure that after shedding the toxic assets, Catalunya Banc represents “a sector average” in terms of equity, liquidity and health. “The entity´s attractiveness upsurged right before the auction”.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Blackstone & Oaktree Vie For the Hercules Portfolio

16/07/2014 – Expansion

The troublesome mortgages of Catalunya Banc will fall into hands of one of the two finalists: the team of Blackstone or the one led by Oaktree. The two consortia submitted their binding offers on Monday and the Catalonian entity will pick the winner any day now. They have proposed the highest, €3.5 billion bids which is considered a very good price for Catalunya Banc and the Fund for Orderly Banking Restructuring (aka Frob).

The alliance of Oaktree, Pimco, Deutsche Bank, Marathon and Finsolutia offered the most equity, however Frob prefers the bid of Blackstone and TPG as the two funds dispose of hundreds of loan management experts in Spain, thanks to the acquisitions of  Catalunya Caixa Inmobiliaria and Servihabitat (from CaixaBank), respectively.

The Key Movement

Hercules Project“, as the sale of the toxic assets was denominated, is the key in the sale of Catalunya Banc itself. Two previous attempts to sell the nationalized entity fizzled out as that-time bidders demanded the Asset Protection Scheme which Frob repelled. The agreement with Oaktree and Blackstone will allow the Fund to cut in the public assistance significantly and will boost the possibility of successful sale of the Catalonian bank.

Frob will cover the loss of €1.5 billion by entering the sale of NPLs as a co-investor who will take the worst quality part of the portfolio. It consists of three sub-portfolios including performing, sub-performing and competely non-perfoming loans. Around 38.000 of them are backed by houses.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Frob to Save a Part of CatalunyaBanc´s “Hercules”

1/07/2014 – Expansion

The Fund for Orderly Banking Restructuring (or Frob by its acronym in Spanish) will buy a stake in the troublesome loans included in the “Hercules” portfolio together with international funds.

Frob distributed a blueprint contract explaining this option among the interested bidders. Precisely, it is going to create an Asset Securitization Fund (ASF) in the shape of the public aids it is obliged to grant.

Sources close to the operation say the entity will not obtain more than €3.5 billion for the €6.5 billion worth of soured loans. Apart from the direct absorption of the portfolio losses, this solution also offers tax incentives.

There are five final team-bidders for the CatalunyaBanc´s toxic credits: Soros and Värde Partners, allied Apollo, Centerbridge and Lone Star, then Pimco, Marathon, Oaktree, Deutsche Bank and Finsolutia, as well as Cerberus – Goldman Sachs team and Blackstone bidding with TPG.

The transaction includes three sub-portfolios made up of non-, sub- and completely performing mortgages. Frob assured it would prevent massive evictions once the “Hercules” changes hands.

CatalunyaBanc told the bidders the deadline for offers passes on July 10th. Possibly, the entity will run another phase in order to obtain better proposals.


Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

CatalunyaCaixa Asserts There Are 12 Entities Concerned About Its €6.5 Bn Loan Portfolio

4/06/2014 – Expansion

Within one and a half month, all the entities interested in buying nationalized CatalunyaBanc will have to provide the FROB (Spain´s Fund for Orderly Banking Restructuring) with their binding offers. The bank on sale has received a €12 billion bail-out during the recession. Now, CatalunyaCaixa says it is ready to change hands due to having cleansed its balance over the past few months.

Today, CatalunyaCaixa asserted that its €6.5 billion loan portfolio will be sold separately and the bank has already received 12 non-binding offers for this Hercules Project. Right now, the FROB is reviewing the proposals. As Expansion has been told, there are four of them with the highest odds of winning: those submitted by teams of Blackstone and TPG, Apollo and Centerbridge, Cerberus and Goldman Sachs and the one of Pimco and Deutsche Bank.

It is worth to mention that two previous attempts to sell the loan package fizzled out.

Once the Hercules substracted from its balance, CatalunyaBanc´s core capital ratio shows 16.6%, whereas the loan to deposit ratio stands at 94%.

The FROB decided to cancel the sale of the bank´s offices outside of Catalonia, only 43 will be finally added to the nationalized entity´s sale in order to meet the ECB´s requirements on basis of the bail-out.

The sector humms at least three banks, i.e. Santander, BBVA and CaixaBank (some say Popular, too) have submitted binding offers for CatalunyaCaixa.


Original article: Expansión (by M. R.)

Translation: AURA REE

FROB Sets Catalunya Banc´s Auction in Motion

3/06/2014 – Cinco Dias

The Fund for Orderly Bank Restruturing (or FROB by its Spanish acronym) has oficially started the bidding for nationalized Catalunya Banc. Process will take place in two stages.

Firstly. the FROB will invite to it the entities that showed most interest in purchase during the bank analysis phase. With the deadline at 14th June, the institutions will have to submit their binding offers.

The FROB will review the proposals and if any of them appears as firm favourite, the Fund will open the second stage where the final bidders (max. three) will be given a chance to improve their bids.

Another, parallel sale of Catalunya Banc´s loans has received plenty of non-binding offers.


Original article: Cinco Días

Translation: AURA REE

FROB Relinquishes Catalunya Banc´s Offices Sale to Dodge State Assistance

30/05/2014 – El Confidencial

 The FROB (Spain´s Fund for Banking Restructuring) surrendered on seeing the meagre interest in the auction of Catalunya Banc´s 196 offices out of its region: it decided they will be sold together with the nationalized entity, not separately.

The fund received only two offers, from Popular and EVO Banco, which aimed at parts of the package and required public assistance. Adding the offices to the core sale will considerably pull down the value of the bank as shedding the network was supposed to cleanse the balance sheets. The fiasco contrasts with the success of the entity´s loan portfolio sale.

Popular´s offer targeted 80 offices in the Valencian Community and Aragon, while EVO bidded for a similar number of units scattered all around Spain to expand outside of Galicia.

Facing more public aid, the FROB could either add it to expenses for banking bail-out or give the sale up. Given that the loan portfolio sold in parallel already takes a €1.5 billion assitance from the fund, it opted for the other path. In fact, the guarantee was the key factor to fuel such an enormous interest in the “Hercules Project”.


Original article: El Confidencial (by Eduardo Segovia)

Translation: AURA REE

Fifteen Days to Smooth Catalunya Banc´s Sale

16/05/2014 – Expansion

The Fund for Orderly Bank Restructuring (or FROB by its acronym in Spanish) has got two weeks for putting together three key puzzles in the sale of Catalunya Banc. Firstly, there is the banking business of the entity eyed by large banks that want to grow in Catalonia. Secondly, the sale of offices outside of the region for which Popular and Apollo have already submitted their offers. Thirdly, the delinquent mortgages reaching €7 billion worth targeted by large international vulture funds.

Frob and its advisor N+1 are currently working on the due diligence stage of the auction. The privatization will start in two, three weeks.

Three Spain biggest banks, Santander, BBVA and CaixaBank, appear as favourites.

With the deadline set at 28th May, funds may submit their non-binding offers for the €7 billion debt embraced by the “Hercules Project“. The soured mortgages require revision, re-consideration about their future management and possible cash flows.

Over 50%-off prices are taken for granted and the final amount to pay will probably reach 30% of the mortgages´nominal value, that is between €2-3.5 billion, while provisions oscilate around €2.5 billion.



Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Credits Given by Frob´s Banks Reached €28 Bn in 2013

21/04/2014 – Expansion

During the last year, the Frob (the Fund for Orderly Bank Restructuring) injected capital in shape of ordinary shares into Catalunya Banc, Novagalicia Banco, Banco Mare Nostrum and BFA-Bankia, becoming their main stakeholder. Then, the entities granted jointly €28.132 million in new loans, the Government says. About 42.3% of this amount was lent to big companies (€11.903 million), whereas SMEs obtained 20.7% (€5.818 million) and freelancers around 5% (€1.424 million). Families received the remaining €4.284 million (15.2%).

Spanish lending entities have reduced their staff number by almost 40.000 employees from 2008 to 2012. Addtionally, throughout 2013 another 18.000 people lost their jobs in these banks and right now there are 213.000 workers within the sector.



Original article: Expansión

Translation: AURA REE

Frob Preps for Transfer of Catalunya Banc´s Mortgages

(…) The Restructuring Fund of Spain (Frob) intents to copy the auction scheme of NCG Banco in case of Catalunya Banc. The public fund wants to draw benefit from the great interest of the international investors in Spain to push the asking price up.

To achieve that, it has already began negotiations with some of the principal U.S. investors on the possibility of putting a part of the Catalonian banks´mortgage portfolios up for auction, according to the sources close to the talks.

On the market it is said that the portfolio could reach an amount of 5.500 million Euros, however Frob denies the information. (…).

According to financial sources, among the funds extremely interested in the operation there are Centerbridge, Kennedy Wilson, Värde Partners, Lone Star and Apollo. They are among the biggest companies in the world and have already acquired a few real estate platforms from Spanish banks in last months. (…).

The talks are preliminary in nature. N+1, investment bank responsable for the auction of Catalunya Banc, wishes to look closely into the real interest on the part of investors and then advise the best choice to the Frob.

To Avoid EPA

Together with the possible mortgage portfolio sale, the Frob hopes to put a pressure on the Spanish banks interested in Catalunya Banc´s property in order to avoid the Asset Protection Scheme (EPA in Spain) at the auction. The public fund prefers to sell the entity piece by piece before granting new public aids.

Thanks to the strategy, Frob has already gained 100 million Euros more at the NCG auction. (…).

This time no one expects that all the investors will bid for the portfolio of Catalunya Banc as “they do not have enough capacity to buy a large mortgage portfolio”. Thus, the price for a portfolio of mortgages up-to-date with payments could be much higher compared to the 4% – 5% that the failed mortgages of the bank are valued at.

The transaction would fit very well to some of the foreign investors that have bought real estate platforms from banks in last months: Centerbridge that acquired Aktua from Banesto; Cerberus bought Bankia Habitat; TPG – ServiHabitat from CaixaBank; Apollo – Altamira from Santander; Kennedy Wilson and Värde Partners got Aliseda and reached an agreement about the real estate company of Catalunya Banc.

Together with the mortgage loans, the Frob and N+1 could sell the failed mortgages and other Catalunya Banc´s enterprises. (…).

Source: Expansión