Spain’s Banks Look to Sell €19 Billion in Real Estate Assets and NPLs in 2019

21 October 2019 – Although the pace of sales has fallen in recent years, Spain’s banks are continuing their efforts to reduce their exposure to non-performing loans and foreclosed real estate assets left over from the financial crisis of the first half of this decade. In the year to date, those banks have sold portfolios of toxic assets worth a total of more than €7 billion. Another twelve other transactions worth approximately €11.7 billion, however, are on course to conclude by the end of this year.

Sabadell has been particularly active, having sold €2.55 billion in portfolios such as Greco and Rex. Unicaja and Ibercaja have also sold assets worth more than €1.5 billion. Santander is currently negotiating the sale of another two portfolios.

Spain’s financial institutions are expected to end the year with total sales of nearly €19 billion, compared to 41.7 billion euros last year, down by more than half.

Original Story: El Español – María Vega

Adaptation/Translation: Richard D. K. Turner

Intrum Acquires Ibercaja’s €600M NPL Portfolio

19 December 2018 – Eje Prime

Intrum is continuing its shopping spree in the Spanish banking sector. The Nordic fund is finalising the purchase from Ibercaja of a portfolio of €600 million in foreclosed assets, which the bank put on the market in November.

The sale of Project Cierzo, which is what the portfolio is called, forms part of Ibercaja’s strategy ahead of its debut on the stock market next year, through which it plans to preserve its independence. Intrum is going to close the operation within the next few days after ending up as the only finalist in the process, according to El Confidencial. With that portfolio sold, Ibercaja will have divested 1.14% of its foreclosed assets.

This new operation from Intrum follows another deal closed just five days ago by the Nordic fund with Banco Sabadell, from which it purchased 80% of Solvia for more than €300 million. Thanks to that sale, the Catalan financial institution generated profits of €138 million.

Since the summer of 2017, when Santander signed the largest property sale operation to date with Blackstone, involving €30 billion in assets, the financial sector has sold portfolios worth €82 million in total and has reduced its exposure to the real estate market to less than €100 billion.

Original story: Eje Prime 

Translation: Carmel Drake

Ibercaja Finalises the Sale of a €600M Real Estate Portfolio

8 December 2018 – El Periódico de Aragón

Ibercaja is continuing to take steps to best position itself ahead of its stock market debut, which is scheduled for next spring. The Aragon-based bank wants to divest more real estate assets before the end of the year to clean up its balance sheet and improve profitability, an objective that it expects will materialise in the coming weeks with the sale of a portfolio of problem assets worth around €600 million, according to confirmation provided by the entity yesterday to this newspaper. To carry out this operation, which is called Project Cierzo, it has engaged the investment bank Alantra, which is finalising the negotiations to find a buyer.

The move by Ibercaja follows the widespread practice across the whole Spanish financial sector and forms part of its strategic plan for 2018-2020, whose goals include the aim of reducing its toxic property assets by half (doubtful and foreclosed) with the mixed sale of around €2 billion in land and housing. That would help to improve efficiency, by bringing it below 55%, and would make the entity more attractive for future investors.

During the period 2015-2017, the bank led by Víctor Iglesias (pictured above, left) managed to clean up €1.6 billion. At the end of the third quarter of 2018, the volume of problem assets amounted to €3.9 billion, which represented a decrease of 10.1% (€437 million) with respect to the same period last year and of 7.3% (€304 million) compared to the end of 2017 (€4.2 billion), according to the figures provided by the entity at the beginning of November. Based on those numbers, Project Cierzo – which was revealed by Voz Pópuli – would represent a significant step towards the objective of cutting the entity’s real estate balance in half by 2020, as there would be around €1 billion left to achieve that goal.

A month ago, Ibercaja announced that it had engaged the bank Rothschild, as an independent advisor for its stock market debut, a step that European legislation requires it to take before the end of 2020. Currently, the Aragon-based bank is controlled by the Fundación Ibercaja, which owns 87.8% of its share capital, a stake that must be reduced to below 50% to avoid a fine. The other shareholders are the foundations of three former savings banks –CAI, 4.85%; Badajoz, 3.9%; and Círculo de Burgos, 3.45%– which it absorbed when it purchased the Caja3 group in 2013.

The entity is working to ensure that its valuation is as high as possible, and so the specific date for the IPO will depend on the evolution of the market. Nevertheless, it is most likely that it will make the leap during the second quarter of 2019.

Original story: El Periódico de Aragón (by J. H. P.)

Translation: Carmel Drake

Spain’s Banks Plan to Sell Real Estate Worth €12.5bn+ over the Next 2 Years

19 November 2018 – El Economista

The banks have set themselves the deadline of 2020 to reduce the property that remains on their balance sheets to an absolute minimum. On the basis of the strategic plans set out by Bankia, Liberbank, Ibercaja and the portfolio of commercial premises put up for sale by Santander, the entities are planning to divest at least €12.5 billion in non-performing assets over the next 24 months.

At this stage, we do not yet know which objectives CaixaBank will set itself in this regard; the entity will unveil its new strategic plan in London on 27 November. Meanwhile, the entity led by Ana Botín has delayed the presentation of its new objectives to the beginning of next year, as it awaits the evolution of the outcome of the elections held in Brazil in October. The exit of the United Kingdom from the European Union, which must take place in March, is also important for the group.

Spain’s entities have accelerated the divestment of their real estate in a frantic fashion over the last 15 months. This summer, Banco Sabadell sold four portfolios of non-performing assets for a combined gross value of €12.2 billion. Those operations allowed the entity to fulfil in one fell swoop the objective that it had set itself in its Strategic Plan 2018-2020 to reduce its non-performing assets by €2 billion per year.

At the end of the third quarter of this year, the entity led by Josep Oliu held €13.62 billion in toxic property left on its balance sheet, nevertheless, once the sales undertaken this summer have been completed, that exposure will be reduced by almost half to €7.67 billion, most of which comprises doubtful loans. The exposure of foreclosed assets has been reduced to around €1.2 billion.

Orderly reduction

With respect to Bankia, in its Strategic Plan to 2020, the entity projected an annual reduction in non-performing assets of €2.9 billion, which would result in the clean-up of €8.7 billion over three years. The bank chaired by José Ignacio Goirigolzarri has divested €2.4 billion during the first three quarters of this year, according to its latest accounts at the end of September, which means that it needs to sell only another €500 million during the final quarter (…).

In the same way, Liberbank closed the third quarter of the year with gross non-performing assets amounting to €3.6 billion, 25% less than it held a year ago. The bank has set itself the objective of leaving €1.7 billion on its balance sheet by the end of 2020, in other words, €1.9 billion less than it currently has.

Finally, Ibercaja, which also unveiled its objectives to 2020 in March, announced its plans to reduce its toxic assets by 50% in three years, which would mean decreasing the balance by around €1.85 billion.

15 months of sales

Santander fired the starting gun on this race with the sale of 50% of Popular’s property to Blackstone, in an operation announced in August last year. Since then, the largest sale by the bank was a portfolio of flats and garages to Cerberus in September, for a purchase price of around €1.535 billion. Thus, the bank still has a second portfolio of foreclosed assets up for sale with a gross value of around €2.4 billion (…).

The most active investment funds to purchase portfolios over the last few months have been Cerberus, Blackstone and Lone Star. Between then three of them, they have made acquisitions of foreclosed assets and doubtful loans from the Spanish banks and Sareb amounting to €48 billion (…).

Original story: El Economista (by Eva Díaz)

Translation: Carmel Drake

Ibercaja Puts €600M Portfolio of Toxic Assets up for Sale

9 November 2018 – Eje Prime

The banks are continuing to divest property. The financial institutions have been working hard over the last two years to erase the ballast of toxic assets from their income statements, which they inherited during the immense economic crisis that Spain lived through at the end of the 2000s. One of the latest to make a move is Ibercaja, which has placed a real estate portfolio worth €600 million on the market.

In this operation, called Project Cierzo, the Aragon financial institution is being advised by the investment bank Alantra. Both companies expect to close the sale within the next few weeks, according to Vozpópuli.

The objective of Ibercaja, like that of other Spanish banks, is to clean up its accounts. In its case, it has the added incentive of its stock market debut in 2019, ahead of which it needs to divest more than half of its property.

Original story: Eje Prime 

Translation: Carmel Drake

Zaragoza Leads the Sale of New Build Homes in Spain

5 November 2018 – El Periódico de Aragón

Zaragoza is still leading the sales of new build homes in Spain. Last year, it was the third-ranked city in the country, after Madrid and Barcelona, in terms of sales volumes, with 800 transactions, and in 2018, it is maintaining that trend. In fact, during the second quarter of the year, the Aragonese capital recorded the sale of 305 new homes, exceeded only by Madrid. That is according to the latest report compiled by the real estate consultancy firm CBRE, which shows that the evolution of Zaragoza this year is even better than last year: 537 new build house sales were recorded during the first half of this year, and so all indications are that they will exceed the 800 units recorded in 2017.

According to the experts, pent-up demand during the years of the crisis, which forced many citizens to postpone their decision to buy a home due to the economic uncertainty, and the current supply of high-quality homes for sale at reasonable prices, are the main causes behind Zaragoza’s leadership of the sector.

Of course, the data is still light years away from the figures recorded before the crisis. “There is still a long way to go in the new build construction market”, said the Director of CBRE in Zaragoza, Miguel Ángel Gómez. During the peak of the real estate boom, 4,000 sales were recorded per quarter in Aragón, and 45% of those were in the new build segment, but that percentage has now dropped to 12%. The figures confirm that the reactivation of the sector is based almost exclusively on second-hand homes. “The supply of second-hand homes is enormous, for that reason, as property developers we have to offer a differentiated, high-quality product if we want to attract customers”, said the President of the Confederation of Construction Companies of Aragón (CEAC) and the Director General of the Lobe group, Juan Carlos Bandrés.

Data relating to the number of building permits that the Town Hall of Zaragoza is granting confirms the new build recovery: last year, 1,526 permits were granted, compared with 1,040 in 2015. This year, it seems that the number of permits granted is decreasing although we still have two months of the year left to run. Either way, the figure is well below the 3,150 recorded in 2009 and light years away from the 8,940 registered in 2006.

The experts also attribute the better performance of Zaragoza compared to other major cities in Spain to the fact that the community has managed to maintain “its own financial system” (Ibercaja), which continues to back the projects of property developers. “Here, there are more possibilities to take projects forward”, highlights Bandrés (…).

Original story: El Periódico de Aragón (by Rubén López)

Translation: Carmel Drake

Alantra Creates Leading European Advisor for Sale of Toxic Asset Portfolios

12 July 2018 – Expansión

Alantra has just signed a document that is going to make it the leading advisor to banks in Europe for the sale of toxic asset portfolios. The deal was signed yesterday in London and involves the purchase of KPMG’s international business specialising in those kinds of bank cleanups. The team comprises more than 35 professionals, mainly seniors, who will move across to form part of Alantra and who will take with them the sales mandates, worth €16 billion, that they are working on at the moment, according to sources at the firm.

After almost a year of negotiations with KPMG, the division is finally going to join forces with the investment banking team led by Santiago Eguidazu (pictured above) to create a new company with more than 75 professionals. The new company will be a subsidiary of Alantra and will be dedicated to advising banks regarding the best exits options for their portfolios of non-performing assets.

To date, Alantra has advised 80 operations in this business across five countries since 2014, for a total nominal value of more than €65 billion. Meanwhile, KPMG’s team has advised on more than 100 transactions worth €180 billion during the same period. The resulting company has averaged 45 transactions per year for the last four years and has advised an operation volume of more than €61 billion. The transaction will involve a cash disbursement for the Spanish firm of €2.83 million.

Banks and funds

The new division will be particularly active in the medium-sized transaction market generated by both banks and funds. The focus will be primarily on Europe, but also other countries around the world where the firm has a presence. In its activity, Alantra will compete above all with PwC, the other major player in the European portfolio business alongside KPMG, and with the US giants Morgan Stanley and Goldman Sachs for the largest contracts.

KPMG’s international team is headquartered in London, with local offices in Milan, Athens, Dublin and Lisbon. Alantra adds Madrid to that list, from where it has organised its global coverage of the portfolio business to date, which has seen it advise operations not only in Spain but also in Portugal, Italy, Greece and Eastern Europe.

The team at Alantra has been responsible for the sale of portfolios by almost all of the Spanish banks, ranging from Sabadell (with which it is working at the moment) to Santander, and including BBVA, CaixaBank, Bankia, Liberbank, Ibercaja and the domestic subsidiary of Deutsche Bank.

The current Head of Alantra’s Portfolio Business, Joel Grau, will lead the new subsidiary, together with Andrew Jenke and Nick Colman, from KPMG.

Global advice

Between the three of them, they will pursue the objective of replicating on a European scale the model that Alantra has been adopting in Spain, and which is based on providing global advise to banks from three perspectives: corporate operations, real estate (large properties and loans from financial entities, as well as those relating to shopping centres and hotels) and portfolios of toxic assets, according to sources at Alantra.

They will operate from two main centres: Madrid and London, where many of the funds that buy the banks’ portfolios are located and thanks to which the business is expected to soar, by reselling financial assets acquired or securitising them to put them on the market.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Spain’s Banks Race Against the Clock to Sell Off Their Problem RE Assets

28 May 2018 – Eje Prime

The banks are facing a new record. The entities have cut their problem assets almost in half over the last four years, but now they are trying to get rid of thousands of properties in record time to keep the supervisor happy, along with investors. The Bank of Spain warned just this week that the volume of impaired assets continues to be high, given that foreclosed assets amount to €58 billion and doubtful loans still amount to almost €100 billion, something that concerns the ECB and penalises the sector on the stock market.

Specifically, Spanish banks’ problem assets amounted to €152 billion at the end of 2017, a very high volume, but 46% lower than the €280 billion registered as at December 2013.

In addition to the cost that maintaining these assets on the balance sheet has for entities, they also prevent them from allocating resources to other activities more in keeping with the banking sector that would generate higher returns, which worsens the problems of returns in the sector especially at a time of very low interest rates.

In 2017, in the face of clear pressure on the banks to significantly reduce their problem assets, the Spanish market resurfaced to account for approximately 50% of the European market for the sale of problem assets, recall the experts.

The announcement by Cerberus of its purchase of 80% of BBVA’s problem assets and the acquisition by Blackstone of 51% of Aliseda and of Popular’s non-performing assets clearly marked a turning point.

And currently, taking into account the portfolios that are up for sale and the forecasts for the reduction in non-performing assets in the plans of many Spanish banks, a high volume of transactions is also expected in 2018.

The entities are on the case

Sabadell is planning to decrease its non-performing assets by €2 billion per year until 2020, although, depending on investor appetite and the agreements with the Deposit Guarantee Fund (FGD), that figure may rise considerably in 2018, explain sources at Funcas.

Meanwhile, in its strategic plan for 2018-2020, Bankia is forecasting the sale of €2.9 billion problem assets per year, even though the entity got rid of much of its real estate hangover with the creation of Sareb, the bad bank.

The placement on the market of this significant volume of assets is not only limited to the large entities; it is also involving smaller firms such as Ibercaja and Liberbank, which are also planning to divest assets.

In the case of the former, its plans involve cutting its problem assets in half between now and 2020, which translates into a decrease of around €600 million per year, whilst Liberbank is looking at reductions of €900 million per year until 2020.

For 2018, Santander has set itself the objective of €6 billion, whilst Sareb is aiming for €3 billion, which shows the real commitment that the entities have to cleaning up their balance sheets and to keeping the supervisor, and the markets, happy. Now they just need to deliver.

Original story: Eje Prime

Translation: Carmel Drake

Cerberus Wins Bid To Manage & Sell Bankia’s Expanded Real Estate Portfolio

5 March 2018 – La Información

Cerberus has fought off competition from Lindorff to become one of the new Bankia’s partners, responsible for managing and selling its portfolio of foreclosed assets, which now exceeds €5 billion. The group chaired by José Ignacio Goirigolzarri has opted to continue with its existing partner in the end, to the detriment of the partner that has been working with BMN since 2014, for reasons that may go beyond the mere economic bid offered by both, indicate reliable sources.

Bankia’s alliance with Cerberus dates back to 2013, when it acquired its real estate firm Habitat on which it built Haya Real Estate, the servicer, which is now finalising its debut on the stock market after having also been awarded contracts to manage the portfolios of BBVA, Liberbank, Cajamar and Sareb (…).

At that time, almost all of Spain’s financial institutions opted to divest their “servicers” in light of the need to accelerate the sale of their toxic assets and the large appetite of specialist funds to grow in size and contracts. BMN’s story is similar. In 2014, it sold its real estate asset company Inmare to Aktua for €40 million. Aktua was Banesto’s former real estate servicer company, which Lindorff acquired from Centerbridge Partners in a close battle with Apollo and Activum SG Capital Management in 2016.

The Norwegian fund, which is itself currently immersed in an integration process with Intrum Justitia, thus took over the management of the real estate assets of the banking group led by Caja Murcia, as well as of those transferred by BMN to Sareb. The entity now also works for Ibercaja and with certain portfolios from entities such as Santander.

Haya Real Estate and Lindorff’s contracts with their respective clients are similar because they both impose a decade-long period of exclusivity, forcing Bankia to review its position following the absorption of BMN, just like with other types of joint ventures. The bank is going to proceed first to break the contracts and indemnify each partner for a sum estimated to amount to €100 million, according to Expansión, and then it plans to close a new agreement with the winning party. Both partners may have submitted similar bids although it is understood that Aktua offered an exclusively commercial service whilst the agreement with Haya Real Estate included the absorption of the workforce.

The transfer of employees

The new Bankia Group’s property portfolio has a gross value of €5.1 billion, as at the end of 2017, compared with €3.5 billion registered a year earlier excluding BMN’s exposure. The entity has a cushion of provisions that covers 35.9% of its portfolio value in such a way that it could afford to dispose of the portfolio at 64.1% of its initial value without incurring losses. The bulk – 62% – are homes associated with foreclosed mortgages and another 16% are properties received for debt in construction or property development – 48% of that proportion corresponds to land -.

BFA’s subsidiary reduced its problematic assets by 9.9% YoY last year – excluding the incorporation of BMN’s exposure onto its balance sheet – thanks, above all, to sales amounting to €427 million (€5.55 million corresponded to gains) and a 15.3% reduction in doubtful risks.

With the integration of BMN, the bank is being forced to review and rethink all of the contracts where exclusive suppliers operate in both networks. It has already resolved one relating to life insurance, which will see it discontinue BMN’s relationship with Aviva – it will pay that firm €225 million by way of compensation – in favour of Mapfre, which was also victorious in 2016 when the bank came across another duplicate alliance, for the first time (with the same British insurance company, which was also a historical ally of Bancaja). It still needs to settle a similar agreement with Caser, and put the finishing touches to its deals with Lindorff and Cerberus.

Original story: La Información (by Eva Contreras)

Translation: Carmel Drake

Cerberus & Lindorff Compete for Bankia-BMN’s RE Business

14 February 2018 – Real Estate Press

Bankia has started talks with Haya Real Estate (Cerberus) and Aktua (Lindorff) to award the management of all of the real estate assets that it has incorporated into its portfolio following its merger with BMN (…), according to sources in the know. Bankia has been working with Haya since 2013 and BMN with Aktua, the former real estate arm of Banesto, since 2014.

The same financial sources indicate that Bankia is now in a stronger position to improve the conditions of its contract in light of the good times being enjoyed in the real estate sector. Although the technological integration of the two entities will not take place until 19 March, the authorities already approved the merger at the end of December.

In 2013, the entity chaired by José Ignacio Goirigolzarri awarded the business to manage and sell around €12.2 billion gross in real estate assets to Cerberus. That agreement comes to an end at the beginning of 2023. Haya Real Estate, the Spanish subsidiary of the US fund Cerberus, has become a major player in the real estate market in recent years. It manages debt and assets worth almost €40 billion and has engaged Rothschild to handle its upcoming stock market debut later this year. It also holds agreements with Sareb, BBVA, Cajamar and Liberbank.

In its failed attempt to go public, BMN got rid of its property manager Inmare in 2014 to focus on the traditional business. It then signed a 10-year agreement with Aktua.

Subsequently, the Norwegian fund Lindorff purchased Aktua in 2016. That company also manages the real estate assets of Ibercaja, amongst other entities.

Cerberus and Lindorff are re-enacting the battle fought last summer. Then, the funds were bidding to acquire the real estate subsidiary of Liberbank, Mihabitans. In the end, the US won those negotiations and was awarded the contract to manage Liberbank’s foreclosed assets for the next seven years.

Original story: Real Estate Press

Translation: Carmel Drake