GS & Cerberus Exit ‘Project Elcano’ Due To Political Uncertainty

24 June 2015 – El Confidencial

Banco Popular, led by Ángel Ron (pictured above), is seeking to divest real estate assets worth €500 million (Project Elcano), but the political uncertainty in Spain is making investors nervous.

According to sources close to proceedings, the main candidates in the running to take over Popular’s portfolio – namely, the private equity fund Cerberus and Goldman Sachs – have decided to postpone investment until after the general election in November, by which time the current uncertain outlook in the country should have cleared.

The same sources add that these two candidates have indicated to Popular that, given the situation in the country following the results of the municipal and regional elections and the subsequent (political) agreements being made, they are not willing to pay the price demanded by the bank; i.e. if the entity really wants to sell, then it will have to lower its (price) expectations.

Ron’s response has been negative because he is not willing to assume additional losses over and above the provisions already recognised against this portfolio. Moreover, other parties are interested in the operation, which means that it could still go ahead before the elections. A spokesman for Popular declined to comment on this information.

This withdrawal is not an isolated case. The uncertainty generated following 24-M (the municipal and regional elections held on 24 May) has had a dual effect amongst the large international investors: firstly, it has made them cautious and slam down on the breaks, whereby delaying numerous deals. Secondly, it has made them reduce their bids, which has punctured the emerging bubble that was forming in the Spanish market, particularly with respect to high quality assets. (…).

Nervousness in the market

Thus, Popular is the latest victim of this new environment in the Spanish market. However, investors and asset managers consider that the case of this bank in particular in more concerning. They are worried about Popular’s sizeable exposure to real estate (it holds around €11,000 million of RE on its books, net of provisions), because they consider that it is not sufficiently provisioned and its latent losses may require new capital contributions. As a result, the announcement that it was going to divest an initial package of €500 million assets generated relief in the market.

For this reason, these latest problems around closing the sale have made some players in the market very nervous. Yesterday, that resulted in decreases of 1.16% on the stock exchange on a day of increases for the Ibex. Popular’s share price has increased by around 15% this year, i.e. by more than the rest of the sector, with the exception of BBVA and Sabadell, however its valuation still falls below those of the major players in the sector at 0.76 times its book value. (…).

Original story: El Confidencial (by Eduardo Segovia)

Translation: Carmel Drake

Carmena Will Not Sever Ties With Banks That Evict Families

27 May 2015 – El Confidencial Digital

The candidate for mayor of Madrid distances herself from Podemos and says that she will not apply the measure that Teresa Rodríguez imposed on Susana Díaz.

The greatest triumph of Podemos in the municipal elections held on 24 May has been the opportunity to become the mayor of the largest city in Spain. However, Manuela Carmena will govern Madrid without implementing one of the most controversial measures proposed by the party led by Pablo Iglesias.

It was after the elections in Andalucía when Podemos launched the headline-grabbing idea: to sever ties with the banks that force the eviction (of families) from homes with mortgages that the owners cannot pay.

The leader and regional candidate, Teresa Rodríguez, proposed this measure during talks with Susana Díaz to negotiate a possible agreement to allow the inauguration of the socialist as President of the Regional Government. Firstly, she demanded that the Andalucían Government should not work with banks that carry out evictions and next, she reduced the condition to require that the Government should not hold accounts with financial institutions that evict those unable to pay their mortgages.

After proposing this measure, several municipal candidates supported by Podemos for the May 24 elections included in their electoral program, or at least declared in public, their commitment to severing ties with banks involved in evictions.

Negotiations with the banks and non-retaliation

However, Confidencial Digital has learned that this measure will not be applied by the candidate who will govern Madrid’s town hall, given that Ahora Madrid did not include this idea in its election manifesto.

Sources close to the candidacy of Manuela Carmena confirm that this measure is not included in her election manifesto and therefore, she does not plan to apply it if she ends up ruling the municipal government of Spain’s capital.

“Ahora Madrid is committed to stopping evictions”, says the electoral manifesto of the municipal brand of Podemos for these elections. Below, it details a series of proposals that the town hall will undertake to avoid evicting people from primary residences and, in the event that they do take place, to offer an alternatives for evicted families.

Nevertheless, at no time does it mention “non-retaliation” against the banks that carry out evictions. Carmena’s manifesto includes only, amongst other measures, incentives for use to be made of  empty homes held by the financial institutions or the “bad bank” (Sareb), through agreements whereby the homes are transferred to the public stock of housing for use in the rental scheme.

Other Podemos candidates do support the measure

It is noteworthy that the candidacy of Ahora Madrid is distancing itself from one of the measures that, after being proposed by Teresa Rodríguez in Andalucía, was supported by many of the candidates that stood in the municipal elections, with the support of Podemos.

That is the case in Sevilla, where Participa Sevilla publicly committed that, if it was elected to the Town Hall, the Sevilla government would not work with banks that evict (people). Its candidate for mayor, Susana Serrano, even asserted that “it is inconsistent that the money from evicted families is held in the same banks that evicts them”.

Participa Sevilla will be key to enabling the socialist Juan Espadas to take the capital of Andalucía from the Popular candidate Juan Igancio Zoido. But the proposals made by the candidates supported by Podemos are more noteworthy; furthermore, they have won the elections and, presumably, will govern the town halls.

In La Coruña, Marea Atlántica – which won four more votes than the second ranked party, the PP – intends to apply the “cancelation of balances with banking institutions that carry out evictions”. Meanwhile, Barcelona En Comú, which has won with Ada Colau as the leader, is going to study measures to put pressure on the banks that do not negotiate with the town hall to put a stop to the evictions: including, “putting a stop to trading with the banking entities in question” and imposing sanctions on those banks.

Original story: El Confidencial Digital

Translation: Carmel Drake