Tag: funds

Santander sells 300 million Euros in consumer loans to a vulture fund.

The Santander group has sold a portfolio of 300 million Euros in default consumer loans to Elliott Management, with a discount of 96%. This vulture fund, which keeps a virulent dispute with Argentina on the release of its sovereign debt, intends to do more operations in Spain.

The multimillionaire Paul Singer, public enemy number one in Argentina, lands in Spain. This investor has acquired a portfolio of default consumer credits from Santander Consumer Finance through its fund Elliott Management with a nominal value of 300 million Euros. Official sources from Santander declined any comments on this operation.

The price paid by Singer´s investing company is practically symbolic: around 12 million Euros, according to sources within the market. The difficulty in being able to recover anything from a portfolio of 87000 operations leads banks to offer bargain prices in order to get rid of them.

For Elliott Management, founded in 1977 by Paul Singer and with 21000 million dollars (16170 million Euros) in managed assets, this operation is the beachhead for future acquisitions in Spain. The group has available funds and considers that the current situation of the Spanish financial sector presents good business opportunities.

The majority of loans within the sold portfolio are for the purchase of cars, although there are also personal loans and for companies. The average amount is 3500 Euros.

The Santander group has closed similar operations during the last few months. In October 2012 it sold a portfolio of loans with a nominal value of 1000 million Euros to Bank of America Merril Lynch and in April 2012 it got rid of another 1000 million Euros in consumer loans, which were transferred to Fortress, specialized in the purchase of default loans.

The company Gesif has participated as a consultant in the operation, in order to measure the recovery possibilities of this portfolio and will offer Elliott its services to manage those default loans.

Paul Singer´s preference for the acquisition of high risk assets has lead him to conflicts with several governments, once his firm has tried to charge its investments in sovereign debt.

The most notorious case was the open conflict with the Argentinian government. Singer keeps a legal claim against the South American country for the non payment of a debt of 370 million dollars (around 270 million Euros) accrued in 2001.

In October 2012, Singer managed the withholding of the vessel Libertad, training ship of the Argentinian army, by the Ghanan government, as an asset which could be seized for the payment of a debt, but finally it was liberated and it returned to Buenos Aires last week.

Source: Cinco Días

The bad bank rejects the participation of three “vulture funds” in its capital.

The bad bank is not willing to sell itself off cheaply. Its management has rejected the participation in its capital of the funds Cerberus, Fortress and Centerbridge, as it considers that the conditions they were imposing are unacceptable, as explained by sources aware of the negotiations between the bad bank and the funds.

The three U.S. companies, known as “vulture funds” because they usually invest in or acquire drifting businesses at very low prices, were demanding certain privileges, such as priority access to the services of the bad bank and discounts on properties and credits which are available on sale. The bad bank has said no as it considers that it would mean granting them a privilege in the face of other investors, including the current shareholders.

The intention of Cerberus, Fortress and Centerbridge was to participate in the capital increase for about 1200 million Euros which will be carried out by the bad bank before the 28th February in order to absorb the 15000 million Euros in allocated properties and toxic credits from Banco Ceiss, BMN, Liberbank and Caja 3, the other four institutions – together with Bankia, Catalunya Banc, Novagalicia Banco and Banco de Valencia – which will receive public aid from the European rescue fund,.

The management of the bad bank, supported by the European Commission, the ECB and the IMF, considers that the current proportion of foreign capital in the company “is suitable” and that the first international shareholders – Deutsche Bank, Barclays and AXA – and all national ones have declared their intention of increasing their participation subscribing a part of this second expansion. (…)

This Friday, the vice-president of the European Commission and commissioner for Competence, Joaquin Almunia, has declared that the bad bank, which will be operational for 15 years, forecasting no losses in any of those years, “is well designed”, even though their management team prepare a new business plan different to the one drafted by the Government. “We have to wait for the money to start flowing in so as to start showing good results as soon as possible; if it is managed as we would like it to, it will be a very effective option”, Almunia has declared.

Source: ABC

The Government launches its social fund for properties: “It is not an excessive effort”.

She seemed Paulo Coelho in a tender day, but she was the vice-president of the Government of Spain. Soraya Saenz de Santamaría attracted all the interest in the mass signature of the agreement to create a social housing fund. The news were that banks were placing 6000 properties at the disposal of those evicted with rents between 150 and 400 Euros, but the vice-president trespassed the red line of sentimentality – which in politics is very fine – in a speech that arose so much astonishment that it overshadowed the family photograph of those signing the agreement.

In front of three ministers, the president of the Spanish Ferederation of Towns and Provinces, several bankers, representatives of the NGOs and some Secretaries of State, Saenz de Santamaría turned the signature of the agreement into a sentimental and paternalistic defense of the protective role of the Government. The vice-president even declared, with a trembling voice, that the Government had put itself “in the shoes of those which had risked for Spain” and had lost “what they loved more”. She was referring to the evicted.

With an even more sorrowful intonation, the number two in the Government stressed that “this agreement recognizes the right to fail, but no to lose one´s life”. That is, “the right to a second opportunity”. “It could happen to anyone of us”, she said.

Saenz de Santamaría left this compassionate tone behind only once. This was to warn that the 5891 properties banks have put at the disposal of the fund are not an excessive number, in comparison with the number of families that have lost their homes because of the non payment of their mortgage since January 2008. “It is not an excessive effort. I hope the financial institutions can excuse me”.

(…) The content of the agreement shifted to the background, but it can be summarized as rented homes destined to families with an income below 19000 Euros per year and with special social features (like, having children aged three or less).

The novelty of this agreement, advanced yesterday by Expansion, is that banks will not be able to choose which properties they allow to be rented, but they will have to release more properties in those areas with more foreclosures. According to the courts of First Instance, Catalonia, Madrid, Andalusia and Valencia are the autonomous regions where the amount is higher.

The town halls will play a leading role, as they will identify those families with a higher risk of social exclusion. (…)

Source: Expansión