Deutsche Bank Sells €430M NPL Portfolio To Oaktree

21 October 2016 – Expansión

The Spanish subsidiary of Deutsche Bank, led by Antonio Rodríguez Pina, has cleaned up the majority of the non-strategic assets that it has been holding in its NCOU (Non-Core Operating Unit) division. According to sources at the entity, the portfolio includes non-performing loans to SMEs, residential mortgages that have been refinanced and structured credits, amounting to €430 million in total. According to a document submitted yesterday by Deutsche Ban SAE to Spain’s National Securities and Exchange Commission (CNMV), this transaction forms part of the bank’s strategy to “substantially reduce the assets of that division before the end of 2016”.

Sources familiar with the operation confirmed that the US fund Oaktree will be the buyer, following a competitive process in which, according to Deutsche Bank “the main investment funds and entities specialising in the sector have participated”.

According to data from Deloitte, Oaktree is, along with Lone Star and HSH, one of the largest buyers of problem assets, with more than €5,000 million in Europe, followed by other players such as Bain Capital, AnaCap and Apollo.

This operation will allow Deutsche Bank “to save costs in terms of the resources it dedicates to the management of this portfolio and, at the same time, reduce its capital requirement”, according to the statement submitted to the CNMV.

Robust results

Despite the delicate situation that the German parent company is facing at the moment, Deutsche Bank in Spain is reporting robust results. At the end of last year, it reported earnings of €91 million compared with losses in the previous year year, according to data from the AEB. Nevertheless, during the first half of this year, the bank has slowed its growth earning just €24.65 million, which represents a decrease of 32% with respect to the same period last year.

Original story: Expansión (by D. B.)

Translation: Carmel Drake

Moody’s: Spain’s Banks May Securitise €105,000M Of Problem Assets

5 October 2016 – Expansión

Moody’s Forecast / The US giant Blackstone has opened an alternative route for Spanish entities to accelerate the clean up of their balance sheets, through the placement of securitisation funds containing restructured credits.

This week will see the placement of the first securitised fund of problem mortgages on the market in Europe by Blackstone, in a move that is set to pave the way for Spain’s banks to replicate the model. Blackstone’s plans involve the sale of some of the assets (€265 million) that it bought from Catalunya Banc in 2015, for a nominal value of more than €6,000 million.

The ratings agency Moody’s estimates that Spain’s banks have €105,000 million in refinanced or restructured problem loans in total, primarily mortgages, which may be put on the market through securitised funds. “The banks are under pressure from the ECB to reduce this load as quickly as possible, to clean up their balance sheets and improve their returns”, said Moody’s in a recent report. According to PwC, half of the problem loans in Europe are held by borrowers in Italy, Spain and Ireland.

Assets susceptible to being securitised are those that have been modified to help the borrower pay, although they do not necessarily need to have been in arrears in the past. The original loan may have been refinanced (offering a new loan to repay the existing one) and/or restructured (changing the terms and conditions). This figure is lower than the total volume of overdue loans owing to Spain’s banks, which amount to €138,000 million and foreclosed properties (€113,000 million).

For example, in its securitised fund, Blackstone has included only those loans that have been performing (being repaid) for more than 37 months in a row, therefore, they are considered to be “high quality” problem assets. In exchange, they offer an attractive yield, more than 100 basis points above Euribor, with a discount of just 10% for those funds prepared to bear the most risk.

In order to open up this market, players have worked hard to obtain support for these types of securitisations from the regulators. Both the ECB, as well as the Bank of England and the European Banking Authority have been working to create specific pan-European regulations to facilitate more simple, transparent and standard securitisations, pending approval from the European Parliament. According to Moody’s, securitisations of refinanced and restructured credits would fall within this definition, which should facilitate their placement amongst investors.


The most active buyers of these types of problem asset portfolios in Europe may now also participate as investors in this market. According to data from Deloitte, Oaktree, Lone Star and HSH are the most active purchasers, with more than €5,000 million, followed by others such as Bain Capital, AnaCap and Apollo.

Until now, many of the portfolios sold by the banks to these funds have been transacted through bilateral operations. Nevertheless, the economic recovery means that the volume of refinanced loans that are now performing (being repaid) is increasing, which means that the sector could generate higher returns from these kinds of securitisations.

Original story: Expansión (by Daniel Badía)

Translation: Carmel Drake