Spain’s Banks Sell Off Debts to Reduce NPL Ratios

 January 2020 During the end of 2019 and the beginning of the new year, Spanish banks have sold, or are about sell, more than €8 billion in overdue loans. Almost all the country’s major banks have been steadily selling off large portfolios of debt, which increasingly are made up of unsecured loans. That represents a change from the focus on mortgages since the end of the real estate crisis. These days, delinquency rates on consumer loans have surpassed 5% of the total, with €5 billion in overdue loans and annual growth above 10%.

BBVA has recently sold the largest portfolios of debt, up to five billion euros in non-performing loans. Half of that has been in the form of unsecured debt, or, in other words, debts with no collateral. BBVA sold its Project Juno to Intrum last year. The portfolio included 300,000 unpaid loan contracts. The bank also recently sold the €2.5-billion Project Hera, made up largely of loans to SMEs, to Cabot and Carval Investors.

CaixaBank, for its part, sold the €865-million Astún portfolio, a group of unsecured loans to companies and individuals. Intrum also acquired the portfolio, along with 50% of the Vento portfolio, sold by Banco Sabadell.

Durante el final de 2019 y el comienzo del nuevo año, los bancos españoles han vendido, o están a punto de vender, más de € 8 mil millones en préstamos tóxicos. Casi todos los principales bancos del país han estado vendiendo constantemente grandes carteras de deuda, que se componen cada vez más de préstamos no garantizados. Eso representa un cambio del enfoque en las hipotecas desde el final de la crisis inmobiliaria. En estos días, las tasas de morosidad de los préstamos al consumidor han superado el 5% del total, con € 5 mil millones en préstamos vencidos y un crecimiento anual superior al 10%.

BBVA ha vendido recientemente las carteras de deuda más grandes, hasta cinco mil millones de euros en préstamos morosos. La mitad de eso ha sido en forma de deuda no garantizada, o, en otras palabras, deudas sin garantía. BBVA vendió su Proyecto Juno a Intrum el año pasado. La cartera incluía 300,000 contratos de préstamos impagos. El banco también vendió recientemente el Proyecto Hera de 2.500 millones de euros, compuesto principalmente por préstamos a pymes, a Cabot y Carval Investors.

CaixaBank, por su parte, vendió la cartera de Astún de 865 millones de euros, un grupo de préstamos no garantizados a empresas y particulares. Intrum también adquirió la cartera, junto con el 50% de la cartera de Vento, vendida por Banco Sabadell.

Original Story: El Confidencial – Óscar Giménez

Translation/Summary: Richard D. Turner

The Pace of NPL Sales Falters in Spain

6 December 2019 – Spanish banks have reduced their pace of sales of NPLs this year, as CaixaBank, Sabadell, Bankia, Bankinter, Unicaja and Liberbank unloaded a total of just 4.9 billion euros in the first nine months of 2019. Those financial institutions wrapped up the quarter with €35.006 billion of such assets on their books, 12% less than at the beginning of the year. In contrast, Spain’s banks in sold off €90 billion in non-performing loans and REOs in 2018.

Standard & Poor’s, on the other hand, published a report in February estimating that Spain’s banks should rid themselves of €30 billion in NPLS between 2019 and 2020. That figure would have lowered their collective NPL ratio to below 4% compared to 7% at the time. Both S&P and Spain’s central bank also argued that the banks needed to increase the pace of sales to prepare for a potential slowdown in the economy.

Original Story: El Economista – Eva Díaz

Adaptation/Translation: Richard D. K. Turner


Cerberus and Tilden Park Each Look to Acquire Lezama Portfolio

4 December 2019 – Cerberus and Tilden Park are vying to acquire Kutxabank’s last large portfolio of bad debts. The two investment funds are looking to buy €400-million portfolio of non-performing loans, called Lezama. Kutxabank’s sale would put its NPL-ratio at less than 2.5%.

The acquisition would be Tilden Park’s first in the Spanish market. Josh Birnbau, a former executive at Goldman Sachs, founded the firm after he became famous for taking a large bet against sub-prime mortgages, one that earned his former company €2.277 billion.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Santander Studying €12-Billion Sale of NPAs

20 August 2019

Banco Santander is considering a potential sale of a €12-billion portfolio of real estate loans by the end of the summer.

The bank is looking to improve its capital ratios in Spain, which are still weighed upon by assets the bank took over from Banco Popular, in spite of a €30 billion sale of assets to Blackstone in 2017, Project Quasar.  On Tuesday, the bank reported that its NPL ratio stood at 7%, above rival banks such as BBVA Spain (-4.9%) and CaixaBank (-4.6%).

Original Story: El Confidencial – Jorge Zuloaga

Adaptation/Translation: Richard D. K. Turner

Bad Debt Ratios for Developers and Construction Companies Fall in June

4 October 2018

The non-performing loan ratio for credit granted to the real estate development fell to 11.3% in June, compared to 21.5% a year earlier, a low for the series. The total outstanding balance stood at 11.405 billion euros, according to data provided by the Spanish Mortgage Association (AHE).

The bad debt ratio for the construction sector also fell by more than ten points in one year, reaching 17.5% at the end of last June, with outstanding debts of €5.104 billion, though the index “remains at relatively high levels,” the AHE warned.

The improvement in the two indicators is largely due to the commitment of Spanish financial institutions to reducing the weight of bad debts on their balance sheets, which “is paying off,” the association announced.

“The favourable evolution of macroeconomic fundamentals, coupled with the intense dedication of the financial institutions regarding the restructuring and disinvestment of their portfolios of bad debts, suggests that we are entering a new phase, where a consolidation of growth and recovery seems increasingly evident,” the Spanish Mortgage Association added.

According to the AHE’s forecasts, improvements in capital ratios and the profitability of financial institutions as they reduce their exposure to the unproductive assets will allow them to increase commercial lending.

“It is to be expected that, at least in the medium term, loan activity will continue to be stimulated, and we will continue to see improvement to the financial system,” the AHE noted, recalling that the DBRS rating agency recently stated that Spain’s deposit institutions had reduced the weight of foreclosed assets from €83 billion in 2011 to €16.9 billion at the end of June, while the weight of non-performing assets was reduced from €232 billion to €75 billion.

Original Story: Europapress

Translation: Richard Turner

Bank Of Spain: Default Rate Falls To 9.84% In May

19 July 2016 – Expansión

The default rate of loans granted by banks, savings banks and cooperatives to individuals and companies decreased to 9.84% in May, returning to a level not seen since July 2012, when it amounted to 9.86%, according to provisional data published on Monday by the Bank of Spain.

This figure includes a methodological change in the classification of Lending Institutions (Establecimientos Financieros de Crédito or EFCs), which are no longer considered within the same category as credit institutions.

The total doubtful debt figure fell to €126,152 million in May, down by €1,583 million from the previous month. In one year, the volume of doubtful loans has decreased by €27,999 million, equivalent to 18.16%.

In this way, the banks’ default rate has decreased by 3.76 percentage points with respect to the historical maximum recorded in December 2013, when it stood at 13.6%.

The decrease in the default rate has come about, in part, thanks to the continuation of the decline in the overall credit balance in the sector in May. Specifically, total loans decreased by €76,786 million, or 0.52%, to €1,281 billion. In YoY terms, overall credit has decreased by 5.06%.

If we exclude the methodological data, the NPL ratio stands at 10.04%, given that the loan balance in this scenario decreases to €1,256 billion.

In line with default rate, financial institutions have cut their provisions by €762 million with respect to the previous month, down to €74,664 million. A year ago, this “buffer” amounted to €91,836 million.

Original story: Expansión

Translation: Carmel Drake

CaixaBank Injects Another €1,900M Into BuildingCenter

6 April 2015 – Expansión

Over the last two years, the bank has invested €4,400 million in its subsidiary, which owns properties that have been foreclosed (by CaixaBank) following the non-payment of debt.

The property sector is still taking its toll on CaixaBank. In 2014, the entity had to inject another €1,900 million in BuildingCenter, the company in which the bank places all of the real estate assets that it forecloses in exchange for (the cancelation of) debt.

This new contribution of funds responds to the need for BuildingCenter to restore the equity balance of its balance sheet, due to the losses generated by these assets, which are managed and marketed by ServiHabitat, the real estate platform owned by TPG (51%) and CaixaBank (49%). BuildingCenter generated a loss of €1,280 million in 2014.

Typically, the bank chaired by Isidro Fainé, rebalances BuildingCenter’s (balance sheet) through capital increases. However, this time, the €1,900 million has been injected into the Catalan group’s bad bank in the form of a “non-refundable monetary contribution from the sole shareholder”. This means that the money forms part of its restricted reserve, and therefore, constitutes the own funds of the company, just like its capital. In 2013, CaixaBank also used this formula to transfer another €750 million to the real estate company.

The BuildingCenter’s last capital increase was also conducted in 2013, for €1,250 million, plus an issue premium of €500 million. Therefore, if we sum the three contributions, CaixaBank has invested €4,400 million in total in BuildingCenter in just two years.

In parallel, over the last two years, the bank has made provisions for the impairment (of its investment in) BuildingCenter amounting to €2,233 million. In 2013, it made provisions amounting to €1,101 million and last year, it made provisions for a further €1,132 million. The NPL ratio of the real estate company is 58.7%.


According to CaixaBank’s annual report, the financing granted by the bank to its subsidiary BuildingCenter, amounted to €9,268 million at 31 December 2014, i.e. 16% more (than a year earlier).

In total, the net book value of the BuildingCenter’s real estate assets amounted to €6,515 million, i.e. 8% more than in 2013. 73% of that figure related to properties that the company had foreclosed from construction companies and property developers in exchange for the non-payment of debt.

Homes resulting from the foreclosure of individual mortgages accounted for 15% of the portfolio, amounting to €1,000 million.

In 2014, CaixaBank (successfully) marketed 23,400 properties, including sales and rentals, for €2,512 million, i.e. 15% more (than a year earlier). The occupancy rate of the rental portfolio amounts to 87%.

Finally, last year, BuildingCenter took over General de Inversiones Tormes and the company VIP Gestión de Inmuebles, which it inherited from Banco de Valencia.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

NPL Ratio Falls For Third Consecutive Month To Reach 12.77%

19 January 2015 – Expansión

The NPL ratio of Spanish banks decreased by 17 basis points in November, to reach 12.77%, its lowest level since September 2013.

The default rate declines in November, for the third consecutive month. The NPL ratio of banks, cajas, credit cooperatives and other financial entities dropped by 17 basis points to reach its lowest level since September 2013. The default rate of the sector as a whole, including companies such as the ICO (Official Credit Institute), amounted to 12.75%.

Doubtful assets decreased during the month by €2,115 million to reach €175,192 million, representing a reduction of 8.2% with respect to November 2013.

There was also good news on the credit side, which recorded a month-on-month rise of €6,014 million, although it was still down by 5.6% year-on-year. We have not seen a lower rate of decline since August 2012, which indicates that the “closed credit tap” is gradually starting to open.

The default rate in the banking sector peaked in December 2013, when it reached 13.689%. Last October, it fell below 13% for the first time since then. Experts and banks predict that the downward trend will intensify this year, although they point out that, whilst credit balances continue to fall, the reduction in doubtful assets will be transferred more slowly to the NPL ratio.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake