Tag: NPL

BMN Sells Part Of Its Recovery Business To Lindorff

6 October 2015 – Expansión

BMN is completing the sale and outsourcing of its recovery business in an agreement with Lindorff. The entity, led by Carlos Egea, has awarded the management of its late-stage non-performing debt portfolio (balances that have been overdue for more than 120 days) to the Norwegian financial group, according to financial sources consulted by Expansión.

According to the same sources, Lindorff has paid around €20 million for the contract to manage this debt for ten years.

It is the second such contract that BMN has awarded to Lindorff. The Norwegian group has been managing BMN’s early-stage non-performing debt portfolio (balances that have been overdue for up to 120 days) since the beginning of 2014; it paid €36 million for this contract.

The nationalised group also did the same thing with its own firm Inmare, dedicated to the management of foreclosed assets and real estate debt; it sold the company to Aktua (owned by Centerbridge) for almost €50 million.

In total, BMN has obtained just over €100 million from these kinds of operations in recent years. These types of sale allow the entity to generate capital gains, which it uses to strengthen its capital base. Although the funds, in this case Lindorff, pay the capital upfront, they recover it subsequently through commissions based on objectives.

Specialisation

One of the other reasons behind such deals, which would have carried less weight in this transaction, is the outsourcing of a service in which banks are not experts and whose results improve when it is delegated to specialist firms such as Lindorff.

The operation has been advised by Montalbán Atlas Capital, a firm that has coordinated similar transactions in the past, such as the one closed by Popular, which sold its recovery business EOS for €135 million; and Sabadell, which sold its business to Lindorff, for €162 million.

In addition to the sale by BMN, Ibercaja has launched the transfer of its real estate management division, together with all of its foreclosed assets, in an operation known as Project Kite.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Popular To Put 15,000 More Properties Up For Sale

16 July 2015 – Expansión

Popular is strengthening its strategy to achieve one of the main objectives it has set itself for the coming years, namely to accelerate the divestment of its non-productive assets. This mainly relates to its real estate portfolio, which includes €15,000 million of problem loans to developers, SMEs and individual borrowers, and a further €14,600 million of foreclosed assets.

One of the initiatives that the bank has set for 2015 is to increase the number of finished properties available for immediate sale through its web channel, by 15,000. It is looking to boost its web channel and thinks that it has great potential. This increase of 15,000 assets represents an increase of almost 50% to the portfolio that the bank currently has available for sale (taking the total to around 30,000 properties).

Channels

Currently, Popular sells 73% of its assets through its network of branches, another 21% through commercial agents and only 6% online. In the rest of the sector, digital channels account for 50% of such sales.

The entity, in turn, is accelerating the sale of large portfolios to wholesale investors. In the last two quarters, Popular has closed four such transactions amounting to €333 million, with a 9% discount on the net book value. These operations have included various assets, from residential land to commercial properties and garages.

As a result, the bank has doubled its volume of property sales in the last year. During the first quarter, Popular closed divestments amounting to €534 million, compared with €249 million recorded between January and March 2014, an increase of 115%. In this way and in just one quarter, Popular sold assets with a value very similar to the total amount sold in the whole of 2013, when sales amounted to around €700 million.

Popular’s strategy to dispose of its problem assets has been boosted in the last year and a half, following the partnership agreed in 2013 with the funds Värde Partners and Kennedy Wilson. That transaction, structured through the joint venture known as Aliseda, is not only generating capital to strengthen the bank’s balance sheet, but is also seeking to take advantage of the funds’ extensive experience in this business to accelerate the sale of assets, reduce the length of the recovery process and maximise divestment prices. Kennedy Wilson and Värde Partners, which control 51% of Aliseda, have almost €25,000 million in assets under management. (…)

Original story: Expansión (by M. Martínez)

Translation: Carmel Drake

Project Formentera: Santander To Sell €170M Hotel Debt Portfolio

18 May 2015 – El Confidencial

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander has put loans worth €170 million relating to 17 hotels up for sale.

A new portfolio of hotel debt has just come onto the market. At a time when investors’ interest in these transactions is at an all time high, Santander, the largest Spanish bank, has decided to pique the insatiable interest of international funds in this type of transaction through the launch of an operation known as: Project Formentera.

It involves a portfolio of loans worth €170 million, linked to 17 hotels. The majority are located in the Community of Valencia and the Canary Islands, which encourages operations with investors interested, primarily, in the holiday segment and in the (Canarian) archipelago.

The portfolio that Santander has just launched joins those being promoted by two of its main rivals, BBVA and Bankia, which have also decided to take advantage of the window of opportunity that has opened to try to offload some of their debts, which include loans that the financial entities are very keen to divest.

According to sources in the market, unlike what may happen in the residential market – a business the banks know very well, since historically they have had the best prepared teams to manage such assets when they fail – the hotel business is a very specialised segment, whose incident rate (casuística) is more difficult for financial entities to manage.

This means that their priority, in general terms, is to try and sell debt, rather than foreclose it and take ownership of assets that they are much less familiar with than residential. If we add the insatiable appetite of the large international investors for the hotel sector, fuelled by the perfect combination of low prices and a strong recovery in the tourism sector, now is the perfect time to carry out these kinds of transactions.

A string of transactions

In fact, at the end of last year, Bankia closed the sale of a batch of hotel loans to Starwood and Sankaty for €400 million (Project Amazona) and is now finalising the second part of that transaction, known as Castle, whose finalists are Apollo, Oaktree and Bank of America. BBVA has also just opened the bidding for 14 hotels it inherited from unpaid loans, a process known as Project Otelo; meanwhile Sareb has just engaged N+1 to manage the sale of a portfolio with a nominal value of €500 million, which is linked to the property developer Polaris World, in an operation known as Project Birdie.

And so the list goes on. A few weeks ago, the German bad bank FMS Wertmanagement sold the portfolio known as Gaudí to Oaktree for close to €500 million – a batch of problem loans linked to, amongst others, the iconic luxury hotel Arts de Barcelona, as well as another high-end property in Cascais (Portugal), five shopping centres, including Plaza Éboli and Heron City, several storage buildings, and residential and industrial assets.

Moreover, the large financial entities that signed the €152 million syndicated loan with the Basque property developer Urvasco, which, in turn, owns the hotel chain Silken, have spent the last few months selling their stakes both in this debt, as well as in those linked to certain establishments, including the Puerta de America hotel in Madrid; Bank of America is taking advantage of this window to enter through the ‘front door’ of what is considered to be the last great Spanish hotel chain up for sale.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Bankia And BMN Both Put NPL Portfolios Up For Sale

27 March 2015 – Expansión

Divestments / Bankia and BMN are seeking to replicate the transaction completed by Catalunya Banc in 2014 on a smaller scale. The market expects a “boom” in these sales in 2015.

After two years divesting shareholdings and bad debts, Bankia considers that the time has come for it to transfer some of the non-performing mortgages that it deems to be unrecoverable. The entity led by José Ignacio Goirigolzarri has put a portfolio amounting to €1,300 million up for sale, of which more than €900 million relate to unpaid mortgages. BMN has also put a similar package of loans up for sale, amounting to €160 million, of which €52 million relate to mortgages.

Investors have received these operations with a great deal of anticipation, because since Catalunya Banc transferred a portfolio of problem mortgages amounting to €6,500 million to Blackstone last summer, no other entity had decided to follow suit.

After the step taken by Bankia and BMN, a number of entities are expected to join the band wagon and put some of their real estate loans to individuals up for sale.

Change of course

Until now, the bank had been reluctant to sell mortgages to opportunistic funds for reputational risk reasons. To avoid this, Bankia and BMN have decided to exclude loans relating to subsidised and social housing (from their portfolios). Moreover, sources in the financial sector explain that overseas funds may offer more alternatives for non-performing loans than the banks, since they purchase the loans at a discount and so can offer discounts themselves. These investors, just like the banks, must comply with the Code of Good Practice developed by the (Ministry of) Economy in 2012.

The sale launched by Bankia forms part of Project Wind, advised by KPMG . In total, the portfolio contains overdue loans amounting to €1,300 million, which are split into three sub-portfolios: mortgages; loans to SMEs and real estate developers, secured by properties, worth €180 million; and unsecured loans amounting to €210 million.

The mortgage portfolio comprises 4,300 loans, with an average value of €214,000. Most of the mortgages were granted to purchase property in Cataluña (32%), Madrid (25%) and Valencia (18%). Furthermore, 83% of the 4,300 non-performing loans are involved in judicial proceedings.

These types of transactions allow banks to remove non-performing assets from their balance sheets, release provisions and devote new resources to new more profitable activities.

Foreign funds will monitor this transaction very closely, especially those who have purchased a real estate platform in recent years: Cerberus (Haya Real Estate), Apollo (Altamira), Centerbridge (Aktua), TPG (Servihabitat), Blackstone (Catalunya Caixa Inmobiliaria) and Värde Partners y Kennedy Wilson (Aliseda). Having purchased the real estate management platforms in 2013, these investors are now keen to nurture (feed) them with their own assets, and whereby obtain profitability from their investments.

In addition to this transaction, Bankia has two other deals in the pipeline: the sale of hotel loans – Project Castle – for which it has received non-binding offers of between €200 million and €300 million; and the transfer of syndicated and bilateral loans amounting to €500 million – Project Commander – which Deloitte is advising.

On a smaller scale

In the meantime, BMN has put a similar portfolio up for sale to that offered by Bankia as part of Project Wind. It amounts to €160 million, of which one third are unpaid mortgages. The sale of this portfolio, known as Project Pampa, is being managed by N+1. Almost all of the 300 mortgages included in this portfolio are secured by properties in Cataluña.

BMN hopes to close the sale of its portfolio by the end of May. In the case of Bankia, the transfer process may last until the middle of the year.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Plans To Reduce Its NPL Balance By A Further €2,000M In 2015

9 March 2015 – Expansión

Bankia hopes to reduce its non-performing loan balance by another €2,000 million in 2015, whereby repeating the success of 2014; it also expects to close the sale of new bad debt portfolios during the year.

At a recent meeting with analysts, the CEO of Bankia, José Sevilla, said that the bank has the capacity to continue decreasing its bad debt balance, which amounted to €16,457 million at the end of 2014, €3,475 million lower than a year earlier.

During 2014, Bankia reduced its non-performing loan balance by €1,900 million (organically) and sold loan portfolios amounting to €1,600 million.

And the forecasts for 2015 are equally optimistic, since Sevilla expects that the doubtful balance will decrease by a further €2,000 million organically and in parallel, Bankia expects to close the sale of new bad debt portfolios.

He revealed that the bank currently has several bad debt portfolios ready for sale and it is finding investors that are willing to pay “better” prices, added the “number two” at the group chaired by José Ignacio Goirigolzarri.

By way of example, he cited portfolios of loans to specific businesses, such as those relating to the hotel sector, where the entity has already found buyers that are offering “reasonable” prices.

The organic reduction in the bad debt balance, together with the sale of new portfolios, makes the CEO think that 2015 will be another year in which Bankia will significantly reduce its doubtful debt balance and therefore its default rate, although that will also be affected by the evolution of its loans.

At the end of 2014, the entity’s default rate was 12.86%, the lowest rate in two years and significantly lower than the figure recorded a year earlier (14.65%).

Original story: Expansión

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

Cerberus, Oaktree, Orion Strike Barcelona’s Hotel Arts’s Debt

9/01/2015 – El Economista

Funds Cerberus, Oaktree and Orion represent three out of four bidding finalists who are one step closer to lucrative Project Gaudi. This €740 million portfolio includes 18 loans with tempting collateral properties, among which the Hotel Arts, situated on Barcelona’s coast, immediately catches eyes of investors.

The credit package was up for sale in October by German bad bank FMS Wertmanagement.

The best bids oscillate around €450 million, meaning that the bidders assume a risk of default which suggests a 40% discount on the loans’ face value.

Apart from the Hotel Arts (pictured on the left), the deal includes such gems as the high-end Penha Longa Hotel & Resort in Cascais (Portugal), owned by a fund of Deutsche Bank.

Moreover, the portfolio consists of five shopping and leisure centers and four business parks in Madrid and Barcelona. Likewise, debt of Bluespace’s 17 storage spaces in Madrid, Barcelona and Valencia is at stake. In 2007, the German entity approved €125 milion in loans for their development.

Of the 18 credits making the Project Gaudi, there are 6 performing, 6 sub-performing and 6 totally non-performing loans.

This is not the first time a German entity decided to shed Spain-related real estate exposure. Last year, Commerzbank transferred huge Project Octopus worth €4.5 billion granted by its Spanish branch to U.S. fund Lone Star allied with JPMorgan.

In turn, Sareb has also sealed several NPL portfolio sales, like Project Pamela (€200 million worth) or Agatha (€260 million).

“Altogether, receivable and defaulting loan transactions amounted to €16 billion in 2014”, assured Patricio Palomar, Alternative Investment head at CBRE.

The Volume to Boost More

“We expect that this year will bring greater figures as many debt refinancing operations and sales are scheduled throughout”, Mr Palomar said.

“Such types of packages will be poached by foreign funds and insurance companies which are already forging vehicles to invest in assets through debt or by financing property developent and rehabilitation projects”, the executive added. To give a few of examples, such is the strategy of Prudential, Alliance and AXA. The last has established a fund called CRES with over €5 billion to spend on real estate across Europe.

 

Original story: El Economista (by Alba Brualla)

Translation: AURA REE

Sareb Transfers €250 Mn “Aneto” NPL Portfolio to Blackstone

9/01/2015 – Expansion

Blackstone has snapped up one of the last portfolios sold by the bad bank of Spain, Sareb. The U.S. investment tycoon has outbidded Goldman Sachs in the auction of “Project Aneto”, composed of loans granted for housing developments and land worth nearly €250 million.

Conducted by KPMG, the bidding invoked huge interest among international funds. The sale included 39 non-performing loans of a face value of €237 million, backed by 29 property developments and land ready for construction. The assets are located mainly in the Valencian Community, Madrid and Galicia.

According to information provided to the investors, originally “Project Aneto” also comprised outstanding loans which finally were left out of the deal.

This way, Blackstone vies for defaulting loans which allow it to get the collateral properties in exchange for debt forgiveness agreed upon with developers.

The deal confirms strong bet of the U.S. fund on the Spanish property market. In 2013, Blackstone acquired a package of subsidized homes from the Community of Madrid, and last year it bought-out the servicer of Catalunya Banc, together with its soured mortgage loans, for €3.6 billion.

 

Original story: Expansión (by Jorge Zuloaga)

Translation: AURA REE

Spanish Banks’ NPL Ratio Falls to 12.9% in October

18/12/2014 – Invertia

According to the provisional data published by the Bank of Spain today, the total value of soured loans dropped to 178.38 billion euros, levelling out to June 2013.

The default rate links seven consecutive months of decline, however it is not so visible as the current credit balance shrank by 0.43%. Precisely, the sector’s overall credit registered in October showed by 6.01 billion euros less than in September.

Not taking into account the recent methodological changes, the non-performing loan rate would stand at 13.16%, down from the previous month’s 1.38 billion euros to 1.35 billion.

The default dipped down in December 2012 and February 2013 as a result of accounting changes after the bad bank of Spain received toxic asset transfers from main entites (Bankia, NCG Banco, Catalunya Caixa, Ceiss, BMN and Caja3) in two phases.

The financial entities maintain their provisions, although there have been some cuts in October bringing them down to 105.74 billion euros. In September, it showed an amount of 106.67 billion.

Progressive Fall to 10% Forecasted For 2015

Antonio Marcos, an analyst at XTB, estimates that the rate will sit at 10% in 2015 due to reduction in non-payment and an increase in lending to companies and families.

Original story: Invertia

Translation: AURA REE

Deutsche Bank Purchases Europe’s Largest NPL Portfolio From BBVA

24/11/2014 – Expansion

BBVA has just sealed the biggest non-performing portfolio deal recorded since the Spanish and the European recessions began.

Namely, the bank chaired by Francisco Gonzalez has transferred a €1.7 billion worth of delinquent loans to Deutsche Bank. Due to the portfolio being 100% provisioned, BBVA might have reaped up to €50 million in capital gains.  Both entities refused to comment on the matter.

This sale represents one of the multiple operations carried out by Spanish banks striving at shedding unproductive assets and focusing on their core business.

Advised by N+1, Project Saturn included 8-years overdue loans which BBVA classified as unrecoverable. The portfolio is made up of personal loans without real estate collaterals and linked to consumption and credit cards.

Over 15 funds asked about the operation, like U.S. Perry Capital, Savia Asset Management, Malasian Aiqon or Norwegian Lindorff, to name few most famous.

Year-to-date, the biggest NPL portfolio sales sealed during the crisis amounted to €1.2 bilion and €1.5 billion, carried out by CatalunyaBanc, Bankia and BMN.

The New Player

This is the first distressed loan purchase in Spain by Deutsche Bank’s London-based independent affiliate specialized in this kind of assets. Deutsche Bank has been eyeing the Spanish debt collection market for months, with no successful acquisitions though.

The German entity is principally interesed in the return the portfolio may produce. After having obtained a 97-98% discount on ‘Saturn’, the bank expects to recover more than a double of that. Instead of creating its own agency, Deutsche Bank will outsource the loan management to Spanish firm TDX Indigo.

Apart from this distressed debt portfolio, the entity bought two real estate-backed credit packages from Sareb (Spain’s bad bank) last year. Altogether, they were a worth of €300 million and had commercial properties in Madrid and Barcelona as collaterals.

In the last months, the German bank has taken part in a bidding for the Spanish-property secured portfolio of Eurohypo and, competing with Oaktree, Pimco, Marathon and Finsolutia it vied for the troublesome loans of Catalunya Banc. In both processes Deutsche Bank offered the second-best bid.

BBVA prepares a sale of its collection agency scheduled at the beginning of 2015.

 

Original article: Expansión (by Jorge Zuloaga)

Translation: AURA REE