Voyager: Sabadell Launches Sale Of €1,000M NPL Portfolio

2 August 2017 – Expansión

Banco Sabadell is accelerating the sale of the non-performing assets accumulated on its balance sheet during the crisis. In just three years, the entity chaired by Josep Oliu has managed to cut its doubtful loan balance in half, which means that it has divested non-performing loans amounting to almost €9,000 million since 2014. In this way, in June of that year, the bank held €17,386 million in problem assets on its balance sheet, compared to the current figure of €8,541 million, according to the accounts published last Friday.

This effort has been made possible by the fact that Sabadell has been one of the most active entities in the sale of debt portfolios in recent years (…). In the last few months alone, it has managed to divest almost €2,000 million through the sale of Projects Normandy and Gregal (…). In addition, the bank has just engaged Deloitte to sound out the market as to whether an appetite exists for another €1,000 million portfolio, known as Voyager.

Gregal and Normandy

Project Gregal contained non-performing loans amounting to around €800 million and was segmented into three sub-portfolios. The last one was sold this week to the fund Grove Capital Management, which has taken over a batch of doubtful loans granted to SMEs. The other two Gregal packages were awarded to D.E. Shaw and Lindorff (…).

On the other hand, at the end of July, the bank managed to definitively close the sale of the Normandy portfolio (€950 million) to Oaktree. That portfolio comprised loans linked to real estate developments and so the amount paid was much higher and is reported to have amounted to around €300 million, which would represent a discount of around 70% (…).

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Project Tour: Bankia Puts €166M Property Portfolio Up For Sale

3 February 2017 – Idealista

The banking sector is starting 2017 with a bang as it accelerates the sale of properties. Bankia has put a new real estate portfolio on the market – it does not contain debt, but rather comprises 1,800 properties, including finished homes, plots of land, retail premises, industrial assets and hotels. Known as Project Tour, the package is valued at €166 million.

Bankia is one of the most active banks at divesting real estate assets once again, as it seeks to focus on its pure banking business. It is a technique that has worked well for the banks in recent years and not just in Spain, but in other countries around the world as well.

In this case, so-called Project Tour is in the hands of the firm Alantra (formerly N+1) which intends to place this property portfolio (known by its initials in English as an REO) with international investors. Its value amounts to €165.9 million, according to financial sources consulted by Idealista.

The portfolio comprises 1,292 finished homes (it does not include any subsidised housing), 324 plots of land, 159 retail premises, 20 industrial assets and 9 hotels. None of the assets in the portfolio are rented or co-owned.

The properties are primarily located in the Community of Valencia, mainly in Valencia; Cataluña, mainly in Barcelona; the Canary Islands, mainly in Las Palmas; Madrid and Castilla y León (Segovia is home to most of these assets).

According to sources consulted by Idealista, Bankia expects to receive non-binding offers from a small number of investors by the beginning of February and binding offers by the middle or end of March. In this way, it plans to close the sale of the package during the month of March.

The entity chaired by José Ignacio Goirigolzarri (pictured above) is known as one of the most dynamic in the market: in 2016, it put several portfolios up for sale, including Project Ocean, a real estate loan portfolio worth almost €400 million, which was sold to Deutsche Bank; Project Tizona, a mortgage debt portfolio worth €1,000 million; and Project Lane, containing properties worth €288 million.

Original story: Idealista (by P. Martínez-Almedia)

Translation: Carmel Drake

Project Normandy: Sabadell Sells NPL Portfolio To Oaktree

9 January 2017 – Catalunya Press

Oaktree, the US fund has won the latest auction of problem assets by Banco Sabadell, as part of Project Normandy. The US fund will pay €250 million for a portfolio of overdue real estate loans worth €950 million.

Oaktree will acquire the assets for a discount of between 25% and 30%, however, the finishing touches still need to be agreed for the operation, which means that it may not be formalised for another month or so.

Oaktree will absorb 500 loans to property developers, amongst others, than Sabadell inherited when it purchased CAM. The loans are secured by property developments, retail premises and land, but their borrowers ran aground following the outbreak of the crisis. Two different strategies are now being pursued: restructure the loan in exchange for a reduction below the price paid (above 25-30%); and/or acquire the assets by legal means and join forces with local property developers (in some cases the same developers whose assets are being repossessed) to carry out the project.

Thanks to Project Normandy, Sabadell has cleaned up more than €8,000 million of problem assets from its balance sheet, whereby reducing the balance from €26,000 million to less than €18,000 million.

In addition to Banco Sabadell, other entities such as Sareb have also closed divestments in recent weeks.

Original story: Catalunya Press

Translation: Carmel Drake

Project Traveler: Sabadell Sells €364M NPL Portfolio To Bain

29 December 2016 – Vozpópuli

The fund Bain Capital Credit (formerly Sankaty) is consolidating its presence in the financial-real estate sector with its fourth acquisition this year. Within the last few days, the investor, which is one of the largest private equity funds in the world, has acquired a portfolio from Banco Sabadell: Project Traveler contains debt relating to 60 developments and hotels worth €364 million.

The entity chaired by Josep Oliu has received around €150 million from this operation, according to financial sources consulted. As such, Sabadell has removed some more non-strategic assets from its balance sheet, which were consuming capital and provisions. This bank is one of the most active in these types of sales as it continues to clean up its balance sheet.

With this acquisition, Bain Capital Credit brings to an end a record year for investment in Spain. The fund has been awarded four large banking portfolios (two from Sabadell, one from Cajamar and one from Bankia) with a combined value of €1,510 million. Given that the banks are selling their real estate debt at prices of between 0.3 and 0.4 times the nominal value, Bain must have spent more than €500 million on these purchases.

As such, the US fund has placed itself amongst the major players in the market for the purchase of distressed assets (those close to bankruptcy) from the banks, alongside Blackstone, Apollo, Goldman Sachs, Cerberus, Oaktree and Deutsche Bank.

“We continue to see Spain as one of the most attractive markets in Europe. We see potential for future investments in the south of Europe, particularly in the real estate sector and the field of unpaid loans”, said Fabio Longo, Director General and Head of European Business at Bain Capital Credit for the real estate sector and doubtful debt.

The other portfolio Bain purchased from Sabadell contained non-performing loans to property developers, with a nominal value of €415 million. Cajamar sold Bain a package of loans worth €511 million, with the special feature that they were all loans to real estate companies that had filed for bankruptcy. Meanwhile, Bankia awarded Bain a batch of 2,500 homes with a combined appraisal value of €220 million. (…).

Copernicus provided financial advisory in this transaction; Aura REE, CBRE, Horwath and Cushman & Wakefield were the real estate valuations providers; Allen & Overy was the legal advisor.

Original story: Vozpópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Project Eloise: Sareb Sells NPL Portfolio To Goldman Sachs

23 December 2016 – Debtwire

Sareb has selected Goldman Sachs as the winner for non-performing loan portfolio Project Eloise, in what is the largest transaction so far for the Spanish bad bank, said a person familiar with the situation.

The final gross book value of the portfolio is EUR 600m, the person said. Launched in the fall/autumn, initially the portfolio had a gross book value of over EUR 1bn, as first reported by this newswire. The size changed during the binding process.

Blackstone was the other bidder selected for the binding phase of the process.

The bad loans of the portfolio are backed by residential assets located across Spain. Sareb has been advised by Evercore.

The deal is still pending subject to signing of the contract, but the goal remains to close by year end, the person familiar with the deal said.

The transaction marks a turning point for Sareb, which had focused on sales of small portfolio until now; in 2015, it closed transactions for approximately EUR 520m.

When it was established, Sareb received EUR 50.8bn in assets to dispose off within 15 years. By December 2015, the portfolio had been reduced to EUR 42.9bn, according to its latest report.

Original story: Debtwire

Edited by: Carmel Drake

Spain’s Banks Still Own €350,000M Of Toxic Assets

26 September 2016 – Expansión

Spain’s banks still have €350,000 million of problem assets on their balance sheets, which they must get rid of if they want to tackle another major problem that they are now facing: their lack of profitability. Most of them have already strengthened their capital to comply with the regulatory obligations demanded by the European Central Bank (ECB).

However, according to data compiled by the ratings agency Moody’s, based on statistics from the European Banking Authority and the Bank of Spain, the burst of the real estate bubble in 2008 and the subsequent financial crisis have left non-performing loans, properties and deferred loans, with a total value equivalent to one third of Spain’s GDP, on the entities’ balance sheets.

Approximately €140,000 million of the total €350,000 million accumulated on the balance sheets of the entities corresponds to non-performing loans or NPLs, whilst the rest is divided between assets such as property developments and land owned by the banks and loans whose recovery has been postponed because the borrowers have not been able to afford the repayments.

As a whole, this burden is reducing the banks’ ability to handle their other great problem: monetary policy at zero-interest rates. Between January and June 2016, the revenues of the banks listed on the stock market which decreased by 1.3%.

In order to resolve this problem, the large entities are having to resort to the market to get rid of their bad loans, albeit with average discounts of 30% on their original values. Various alternatives are being explored to this end, including the structure being prepared by entities such as Banco Popular, which will debut a subsidiary on the stock exchange containing up to €6,000 million of toxic assets. Other entities are packaging up and selling loans and properties to funds that specialise in their management. According to the consultancy firm Deloitte, Spain’s financial entities currently have problem assets worth €20,000 million up for sale.

The analysts at Moody’s consider that the rate of reduction in the non-performing loan balances of Spanish banks is clear for all to see. “But it is not as visible in terms of the volume of foreclosed properties or deferred loans, which are still classified as performing”, explain María Cabanyes and Alberto Postigo, analysts at the ratings agency. They consider that it is essential that these latter loan categories be included within the “problem” loan balance so as not to hide any of the risks.

Moody’s, which estimates that Spain’s banks have deferred loans amounting to around €100,000 million, highlights that on the basis of the transparency exercises performed by the European Banking Authority, Spain is one of the banking systems that is most exposed to the problems of toxic assets. (…).

For this reason, from 1 October 2016, a new calculation method for recognising provisions against these assets will come into force, imposed by the Bank of Spain. (…).

Original story: Expansión (by Daniel Viaña)

Translation: Carmel Drake

Banks Sell €11,000M NPLs To Clean Up Their B/Ss

30 June 2016 – El Confidencial

Property is still the main obstacle facing Spain’s banks. Although the majority of the domestic financial entities will comfortably pass the European Central Bank (ECB)’s upcoming stress test, most are still weighed down by non-performing loans linked to the real estate sector, which are blackening their balance sheets. To this end, CaixaBank, Bankia, Sabadell, Popular and even Deutsche Bank have put portfolios of non-performing loans up for sale amounting to almost €11,000 million, according to data compiled by El Confidencial.

The most active bank is Sabadell, which has engaged KPMG, PwC and N+1 to help get rid of €3,100 million in consumer loans, credit cards and loans granted to property developers. Of that amount, €1,000 million was sold to the funds Lindorff and Grove Capital last month in an operation known as Corus. Now, the entity has another €1,700 million on the market (Project Normandy), containing foreclosed loans from real estate developers and almost €500 million (Pirenee) corresponding to a mixture of assets. The entity is looking to close both transactions before the summer holidays.

After Sabadell, the most active bank in cleaning up its balance sheet is CaixaBank, which has two processes underway and one in the bag. These include the so-called “Project Carlit”, launched in April with the help of PwC to sell off €750 million in loans linked to shopping centres, offices and the industrial sector; and “Project Sun”, a portfolio of loans granted to almost 150 hotels that the entity foreclosed from businessmen in the sector. In total, around €1,000 million in non-performing loans.

The latter is backed by 11,000 tourist rooms, and several opportunistic funds may be interested, including Starwood, Davidson Kempner Capital and Bank of America. Those entities previously acquired similar liabilities from Bankia in 2014 and 2015 for €1,200 million. In Septemeber, the Catalan entity is planning to launch “Project More 2” containing €200 million of real estate loans, again with the help of PwC.

Bankia, which last year failed to find a buyer for its huge real estate portfolio containing €4,800 million of assets has engaged KPMG, Deloitte and PwC to advise it in 3 of its operations: “Project Lane” (€288 million), “Project Oceana” (€396 million) and “Project Tizona” (€1,000 million). The latter comprises residential mortgages and is the second part of the transaction known as “Project Wind”, when the entity sold €1,300 million in similar liabilities to the fund Oaktree.

Alongside these three major players, several other entities also have operations on the market, including Popular, Banca Mare Nostrum, Abanca (which just sold €1,300 million in NPLs to EOS) and Ibercaja…But the entity that has drawn the most attention is Deutsche Bank, because it had not chosen to clean up its accounts in this way until now. The German group, the only foreign bank with a presence in Spain, which has an extensive network of offices, is sounding out institutional investors regarding the sale of €800 million in non-performing mortgages.

Although the German entity was not greatly impacted by the real estate crash, thanks to its prudent strategy vis-à-vis granting property-related loans, the truth is that it was weighed down by packages of unpaid loans from high income clients. Antonio Rodríguez-Pina, Chairman of the bank’s Spanish subsidiary, has decided to get rid of these NPLs in order to improve its balance sheet and reduce the default ratio, a measure that coincides with Deutsche Bank’s decision to continue its operations in Spain, for the time being. (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Abanca Sells €1,400M NPL Portfolio To EOS Spain

14 June 2016 – Expansión

Two years after taking ownership of Abanca, the Venezuelan company Banesco has started to sell off the bank’s toxic assets. Yesterday, the financial entity headquartered in Galicia reported its first sale of non-performing loans, amounting to €1,385 million, which represents approximately 20% of its total NPL portfolio.

All of the loans were overdue and unsecured, which makes it one of the largest operations of its kind in recent years and also, concentrated in a single buyer.

EOS Spain, a company that specialises in collections management was the winner of the competitive process. It is headquartered in A Coruña and is a subsidiary of the international group EOS. The transaction generated profits of €57.4 million for the bank, according to a statement filed with the CNMV.

The auction generated significant interest, with participation from around twenty investment funds and entities specialising in the recovery of overdue debt. For this competitive process, Abanca was advised by KPMG, the same firm that audits its accounts.

The operation (…) will open a series of future transactions as part of Abanca’s strategy to divest of its non-performing assets. In fact, it says that it is already evaluating similar operations for its non-strategic assets, with the aim of focusing the business on providing credit to families and companies and to boosting the economy.

One of the upcoming operations will involve a portfolio of non-performing loans, secured by mortgaged assets, although that will be smaller than the portfolio just sold. By contrast, the bank will hold onto the other overdue unsecured loans so that they can be managed by Abanca itself.

For EOS, the purchase “represents the strengthening of its relationship with Abanca”, according to a statement from the bank, as well as an intensification of competition and an improvement in its position in the domestic market.

Improved capitalisation

The main effect of the sale has been on the solvency of the entity, given that it had fully provisioned all of the non-performing loans that it has now sold. Abanca calculates that with this transaction, it has improved its capital coefficient by five basis points since the first quarter of the year, when it stood at 14.8%, one of the highest in the sector. Meanwhile, the doubtful asset coverage ratio amounted to 60.8% during that same period. According to the annual accounts, Abanca had decreased its doubtful debt balances by 30% last year to €2,695 million as at December 2015; furthermore, it reduced the weight of foreclosed assets on its balance sheet to just 1%.

Of the total impaired asset balance, more than half (€1,900 million) are secured and only €114 million were overdue by three months or less (as at December 2015), according to details disclosed in the consolidated annual accounts for 2015.

Beyond its consolidated balance sheet, the entity accounted for €5,376 million of financial assets that it had written off. The bank explained that it was not including them on its balance sheet because it regarded (the likelihood of) “their recovery to be remote”, although it clarified that it has not stopped trying to collect the amounts due.

Original story: Expansión (by A. Chas and J. Zuloaga)

Translation: Carmel Drake

Sabadell Puts €1,300M NPL Portfolio Up For Sale

20 April 2016 – Expansión

Sabadell has become the most determined Spanish entity when it comes to trying to clean up its balance sheet. The entity chaired by Josep Oliu (pictured above) has two portfolios up for sale through which it hopes to sell off €1,300 million of non-performing assets. Moreover, it may soon add another €1,700 million portfolio, if a large deal that the entity is currently preparing eventually goes up for sale. In total, €3,000 million, of which €2,200 million comprises doubtful loans linked to real estate developments, and which represent around one sixth of its doubtful assets in Spain. The remainder, €800 million, relate to non-performing consumer loans.

The latest divestment to come onto the market is Project Pirene, advised by KPMG, containing €460 million of problem assets linked to property developers, according to sources consulted at international funds. Unlike some of its recent operations, this one originates from Sabadell’s own business, and not from CAM, Caixa Penedès or Banco Gallego.

This operation combines Project Corus, with €800 million non-performing consumer loans; and Project Normandy, under assessment, with €1,700 million non-performing real estate loans, according to El Confidencial.

The Catalan group hopes to close the first two operations within the next two months, so that they may be accounted for in its financial statements for the first half of the year. Meanwhile, Project Normandy may be delayed somewhat due to its large size. In fact, the operation would be one of the largest seen in Spain in recent years. The largest, Project Big Bang, containing €4,800 million in foreclosed assets, was suspended by Bankia due to its complexity and the large discounts being demanded by the funds.

Sabadell was one of the Spanish entities that reduced its default rate by the most during 2015. Following the purchase of the British bank TSB, its default rate fell by almost five percentage points. If we exclude that acquisition, the rate fell by almost three percentage points, from 12.74% to 9.86%. In total, the entity manages €21,500 million of problem assets, with a coverage ratio of 53% for its doubtful debts and of 44% for its real estate assets.

Besides these operations launched by Sabadell, only a handful of other entities have decided to divest their problem assets so far in 2016, namely Cajamar, Bankia and BBVA. Popular announced that it would be very active, but it has not yet put any portfolios on the market.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Project Wind II: Bankia To Put €800M NPL Portfolio Up For Sale

21 March 2016 – El Confidencial

After withdrawing Project Big Bang from the market, through which it had hoped to divest the real estate assets that it did not transfer to Sareb amounting to €4,800 million, Bankia has decided to accelerate the pace of its other divestments, as it continues to analyse how to get rid of all of the property that it has on its balance sheet.

To this end, the entity chaired by José Ignacio Goirigolzarri is finalising the launch of Project Wind II, involving the sale of a portfolio of overdue mortgages. Although the details are still being finalised, the bank’s idea is to place a portfolio containing loans amounting to almost €800 million.

Last year, Bankia successfully closed Project Wind I, an operation that represented the entity’s first major sale of mortgages to investors in its history. On that occasion, the bank put loans with a value of €1,300 million on the market, divided into three sub-portfolio: more than 4,000 mortgages worth €918 million; loans to SMEs secured by RE collateral worth €180 million; and unpaid loans to SMEs worth €216 million.

Oaktree ended up acquiring the mortgages, whilst Chenavari bought the two smaller packages. For this second version, Bankia has already started to make contact with the funds, a temperature check that has awakened interest in the sector, given that it involves one of the most important portfolios forecast for this half of the year, together with Project Normadía, launched by Sabadell.

As El Confidencial revealed, the bank chaired by Josep Oliu has engaged PwC to sell its €800 million portfolio of consumer loans and credit cards, and is also analysing placing another package containing loans to property developers amounting to €1,700 million.

Appetite in the market

The funds that normally participate in these types of processes, such as TPG, Cerberus, Apollo, BofA, Goldman, Oaktree and Chenavari, are paying particular attention to the sale of these portfolios, above all, after Sareb shifted its strategy and decided to commit itself more to the retail channel.

Bankia is expected to resume Project Big Bang at some point during 2016 but, instead of forming a single portfolio, the market expects that it will divide it into several batches, given that the interested funds have already advised the bank that it is too large and diverse a portfolio to be ‘hunted down with a single shot’.

Last year, the entity carried out four major loan portfolio sales for a combined total of almost €2,800 million, which benefitted the bank’s balance sheet and allowed it to reduce its doubtful balance by more than €2,000 million.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake