Tag: non-productive assets

Popular Will Open 40 Branches To Sell Its Homes

17 January 2017 – Invertia

Banco Popular has launched a new network of 40 branches, four regional teams and a workforce of 400 people to manage its newly carved out real estate business.

According to a statement made by the entity, 12 of these branches will be located in Cataluña and Levante, 10 in Madrid and the Centro region, 10 in the North and the Pastor region and 8 in Andalucía.

The objective of this network, which will report directly into the General Director of Real Estate Business and Asset Transformation is to manage the bank’s real estate business and to manage collections in a holistic way “with the perspective of optimising capital, in line with the bank’s overall objective to reduce non-productive assets”.

The creation of this network forms part of the restructuring process that the bank is currently carrying out and which has involved the separation of its core and real estate businesses.

Original story: Invertia

Translation: Carmel Drake

Popular Instructs Aliseda To Sell €4,000M Property Portfolio

21 January 2016 – Expansión

(…) Following on from Banco Popular’s announcement yesterday that it plans to divest assets worth €8,000 million…. Aliseda, the company ultimately responsible for handling the sale of the real estate assets sitting on Popular’s balance sheet…has been given a mandate to find a buyer for a portfolio of properties with a book value of €4,000 million. The market price of the portfolio has not been revealed.

Aliseda is owned jointly by Banco Popular (which holds 49% of its share capital) and the investment fund Värde, which controls the remaining 51%. During its first round of contacts to identify parties potentially interested in purchasing the property portfolio, the heads of Aliseda have identified half a dozen investment funds that may put forward bids.

In addition to this block sale of properties, Popular’s plans for the divestment of its non-productive assets this year include the sale of another €4,000 million of properties and loans.

The aim is to significantly reduce the non-productive part of its balance sheet. If the forecasts that the entity plans to announce next week at its 2015 results presentation are fulfilled, then Popular will succeed in reducing its problem portfolio by 25% by the end of this year. Such an acheivement would not only lighten the load on its balance sheet, it would also represent the clear implementation of one of the recommendations that the European supervisory authorities are making, with more emphasis on the European banks. That recommendation urges banks to take advantage of the provisioning efforts made in recent years and to sell non-productive assets that are weighing down on their accounts, particularly those that have associated maintenance and financing costs, as they are also penalising their income statements.

In order to put the objective that Popular is setting itself into context, it should be noted that the bank sold properties worth €1,000 million and non-productive assets amounting to €1,500 million during the first nine months of last year (the most recently available public data). Market sources consider that the combination of sales that Popular wants to carry out will have a neutral effect on the income statement, from the perspective of direct revenues, given that the discounts on the net value of the properties included in the portfolio that it wants to sell over the coming weeks will likely be offset by the net revenues that it will obtain from the sale of the other assets to be sold.

Nevertheless, overall, the operation should result in cost savings for Popular amounting to more than €200 million, according to market sources, given that the associated maintenance and operating costs will disappear and there will be no need to make new provisions for the assets sold. Moreover, and, above all, the bank will make significant savings in terms of the financing costs associated with its assets. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Bank of Spain: Banks Still Hold Land Worth €28,500M

5 November 2015 – El País

The banks still have not fully digested the over-indulgence in real estate that preceded the crisis. The volume of assets foreclosed by financial entities due to the non-payment of loans amounted to €81,000 million as at 30 June 2015, having decreased slightly, by 0.9%, in one year, according to figures published yesterday by the Bank of Spain in its Financial Stability Report. Moreover, the main component of this €81,000 million hangover, is land, the least productive of all assets and also the hardest to sell. Land represented 35.5% of the total balance, in other words, around €28,500 million of the foreclosed assets held by banks are plots of land.

Since the crisis began, the banks have not been able to significantly decrease the volume of real estate assets on their balance sheets. Although they are selling homes and developments as fast as they can, they are still foreclosing new properties due to non-payment.

Only the clean-up of balance sheets that took place in the second quarter of 2012 and the first quarter of 2013, when the rescued entities transferred most of their real estate assets to the bad bank, led to in a decrease in the total volume. Since the middle of 2013, the volume of properties on the banks’ balance sheets has not stopped growing and it peaked at €82,500 million at the end of 2014. During the first half of 2015, the balance decreased by around €1,500 million, or 2%.

More foreclosed homes

In terms of the composition of the banks’ real estate portfolios, 35.3% corresponds to land, whose weight has decreased by almost 3 percentage points in the last year. Meanwhile, 24.9% are finished buildings (amounting to just over €20,000 million, with a reduction of 1.1 points in the last year), with work in progress buildings accounting for 6.6% of the total, having increased by 1.6 points. Finally, 21.5%, or c. €17,400 million of the total, relates to foreclosed assets resulting from house purchases (which increased by 0.5 points with respect to June 2014).

“If we add doubtful assets to those assets that have been foreclosed in lieu of the debt payments, then the banks’ held assets amounting to €224,000 million on their balance sheets as at June 2015, none of which are generating any revenues for the income statement. These two types of assets, which represent 8.7% of the banks’ total assets in Spain, are placing negative pressure on the entities’ income statements, reducing their ability to generate profits”, says the Bank of Spain in its report.

Original story: El País (by Miguel Jiménez)

Translation: Carmel Drake