Tag: Oliver Wyman

CPPIB Awards Altamira the Mandate to Manage BBVA’s Former €1.5bn Portfolio

1 March 2019 – Voz Pópuli

The Canadian pension fund (CPPIB) has delegated the management of the Ánfora portfolio, purchased from BBVA, to the servicer Altamira, according to financial sources consulted by this newspaper. Altamira has declined to comment on the reports.

It is a striking decision given that the fund decided to sell its stake in the servicer to DoBank in January, along with Apollo.

Between them, the two funds used to own 85% of Altamira. Santander owns the remaining 15%, although that stake could also end up being sold to DoBank. This operation shows that the Canadian fund continues to trust in Altamira, despite its exit from the company.

Agreement with BBVA

BBVA signed an agreement to sell the aforementioned loan portfolio, which mainly comprises mortgage loans (primarily doubtful and non-performing loans) with a live balance of approximately €1.49 billion to CPPIB in December. That operation formed part of the bank’s strategy to reduce its exposure to real estate risk to a minimum.

In the last two years, BBVA has closed a series of operations that form part of that real estate strategy, including the transfer of its real estate business in Spain to Cerberus, which was announced in November 2017 and closed last October.

The acquisition of 100% of the share capital of the servicer has been valued at €412 million in business value terms, according to Oliver Wyman, strategic advisor to the operation.

Altamira offers NPL services, including the sale, development and administration of real estate assets, advisory services and portfolio administration activities. In 2017, it had a market share of 15% in Spain, with assets amounting to more than €140 billion and a workforce of 2,200 employees.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

BBVA, CaixaBank & Sabadell Recorded Revenues of €5bn from House Sales in 2017

2 April 2018 – Expansión

Last year, BBVA, CaixaBank and Sabadell recorded revenues of more than €5,065 million from the sale of homes that came onto their balance sheets due to non-payment during the years of the crisis. Santander obtained €1,295 million in this regard, and Bankia and Bankinter received €457 million and €138 million, respectively. In total, the banks in the Ibex 35 recorded sales of €6,955 million from the sale of homes, which represented a YoY increase of 6%.

In parallel to the signing of agreements to launch the transfer of the bulk of their portfolios of toxic assets to specialist funds, year after year, the banks are marketing properties through their own distribution platforms to clean up their balance sheets and return them to the figures that they registered before the outbreak of the crisis.

BBVA recorded the highest revenue figure, of €2,121 million, which represents an increase of 7.5% YoY, from the sale of 25,816 properties. Its subsidiary Anida is responsible for distributing its products in the market.

By the end of last year, BBVA’s exposure to the real estate sector had decreased by 37.2%, to €6,416 million, due, primarily, to the wholesale operations undertaken.

Last year, the bank chaired by Francisco González made a turn in its real estate strategy by agreeing to create a joint entity with Cerberus to which it will transfer some of its properties, worth around €13 billion. The bank will hold a 20% stake in that entity and the fund the remaining 80%. The operation is expected to be closed during the second half of 2018.

Last quarter

The largest increase in the sale of homes was achieved by CaixaBank, which saw its revenues rise by 20.4% YoY to €1,610 million. Most of those operations were concentrated in the final quarter of the year when proceeds of €561 million were received.

Through Servihabitat, CaixaBank markets the properties of the group’s subsidiary BuildingCenter online, as well as through the branch network and API. The bank has €5,878 million in foreclosed assets up for sale and €3,030 million allocated for rent.

The bank has engaged KPMG, Oliver Wyman and McKinsey to redefine its strategy and gain efficiencies in the divestment of the foreclosed real estate assets.

As part of that roadmap, last week, CaixaBank sold 1,458 homes to Testa for €228 million.

Meanwhile, Sabadell cut its property sales by 14% to €1,334 million due to fewer sales to institutional investors, which fell from €233 million in 2016 to €57 million a year later. Last year, Sabadell divested 14,924 properties, up by 2.6% compared to the previous year. Its subsidiary Solvia is its main distribution channel.

In parallel, Sabadell has placed two toxic real estate portfolios up for sale, proceeding in part from the former CAM, under advice from KPMG.

Last year, Santander recorded revenues of €1,295 million from the sale of foreclosed assets, which represented a YoY increase of 19.5%. The gross value of the assets sold by that bank last year was €2,168 million, up by 33% compared to the previous year. Santander obtained profits of €95 million from its sales, up by 64%.

Altamira is Santander’s distribution platform, which held €11,661 million in foreclosed assets at the end of 2017, of which €5,943 million proceeded from Popular. To that figure, we have to add €3,619 million in assets from Popular included in the operation agreed with Blackstone, which will allow the clean up of the group’s toxic assets (…).

Finally, Bankia sold 8,430 properties in 2017, which represents 20.2% of the stock it had held at the beginning of the year, for which it recorded revenues of €457 million, down by 2.9%. Bankinker, one of the banks with the lightest real estate load obtained €138 million, up by 2.2%.

Original story: Expansión (by Elisa del Pozo)

Translation: Carmel Drake

CaixaBank Hires KPMG to Accelerate Sale of Rental Homes Worth €3bn

29 November 2017 – El Confidencial

Spanish financial entities have put their foot down on the accelerator to remove a decade’s worth of real estate crises from their balance sheets. The starting gun was fired by Banco Santander in the summer, when it transferred 51% of the €30 billion in toxic assets that it had inherited from Popular to Blackstone; and yesterday, another milestone was marked by the agreement announced between BBVA and Cerberus, which will allow the bank to deconsolidate more than €12 billion in foreclosed assets.

The next major step may involve CaixaBank after the entity engaged KPMG to try to accelerate the sale of a significant batch of real estate assets, with a net value of €12.1 billion. Specifically, the professional services firm is already working on organising one or more processes to allow the sale of some of the €3 billion that the bank owns in rental assets, according to sources familiar with the process.

That portfolio contains almost 40,000 units and, if it ends up being sold, will represent one of the most significant divestments made by the entity to date. Sources at CaixaBank acknowledge that they are working with KPMG and admit that one of the services that the firm is rendering “may include the sale of certain foreclosed rental assets” but they point out that it would only for a portion of the aforementioned €3 billion.

The sale to Testa of 135 homes, announced in September, fits within this strategy – a small appetiser ahead of the main course that the bank led by Gonzalo Gortázar really wants to serve. Its efforts are aimed at trying to taking advantage of the excess liquidity held by the large funds and the current attractiveness of Socimis to find an exit for its foreclosed rental assets.

Despite CaixaBank’s interest in reducing its real estate exposure, something that both the Bank of Spain and the European Central Bank are asking the entire sector to do, the entity is choosing to be cautious. It is pushing ahead one step at a time, according to market sources, who say that the bank is working to redefine the future of its whole real estate division.

New route map

CaixaBank’s real estate activity is currently divided into two large subsidiaries, Building Center, the real estate company that owns the bulk of the entity’s foreclosed assets; and Servihabitat, a platform (servicer), in which the bank holds a 49% stake, whilst the other 51% is owned by the fund TPG.

The second company, which has been given the mandate to manage the bank’s properties, but not ownership of them, has just hired Iheb Nafa as its new CEO, to replace Julián Cabanillas. It has also engaged McKinsey and Oliver Wyman to analyse all of its future options; any change would require the firm to reach an agreement with TPG; moreover, that giant may be interested in increasing its stake in Servihabitat.

CaixaBank has net real estate assets amounting to €12.1 billion according to its most recent quarterly report as at 30 September. All of this “property” is included in the area known as Non-Core Real Estate, which generated losses of €330 million during the first nine months of the year. The jewel in that crown is the real estate company Building Center, owner of the majority of the foreclosed assets, whose accounting coverage ratio stands at 49%.

Sources in the sector expect the bank to make its big move within the next year, and for it to be in line with those already made by BBVA and Santander. For the time being, the entity is limiting its expectations to the field of research, by indicating that “KPMG, Oliver Wyman and McKinsey are redefining operating processes to improve logistics and efficiency”.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

TPG & CaixaBank Hire Cerberus Director To Lead Servihabitat

3 November 2017 – Voz Pópuli

The times are changing at Servihabitat, the real estate arm of CaixaBank and one of the largest servicers in Spain. The platform, which is owned by the fund TPG (51%) and the Catalan bank (49%), has appointed a new board of directors after Julián Cabanillas’ decision to leave the firm; he had served as CEO until now.

The historical director of La Caixa has decided to step down after fulfilling the term that he had committed to undertake with the bank and the US fund. According to financial sources consulted by Voz Pópuli, Servihabiat has hired one of the key directors at Cerberus in Spain to replace him: Iheb Naffa, the CEO of Gescobro until now.

For more than a decade, Nafaa was one of the directors of the financial arm of General Electric (GE Capital) in Spain, serving in roles such as the Director of Risks, Director of Operations and Director General. Gescobro hired him in 2015, at the same time as that firm was acquired by Cerberus.

Nafaa will have another former director of General Electric as one of his right-hand men at Servihabitat, namely, Edelweiss Obiol, with whom he worked at the US company. Obiol replaces Feliu Formosa, another former La Caixa director who is leaving Servihabitat,  as Finance Director.

McKinsey and Oliver Wyman

The changes in Servihabitat’s leadership come at a time when the real estate company is carrying out a significant internal review. To this end, it has engaged two consultancy firms: McKinsey and Oliver Wyman. Sources consulted explain that these two firms are focusing on improving the real estate company’s internal processes, rather than on involving it in a merger or sale.

One possible corporate operation has been flying over Servihabitat for years. Conversations were even held with the private equity group Investindustrial last year. Various options have been explored, ranging from CaixaBank’s repurchase of TPG’s stake to then look for another operation, or for the fund to sell its 51% stake itself.

All indications are that changes may be afoot in 2018, in the face of the more than likely consolidation of the servicer market. Cerberus, where Nafaa is moving from, Apollo and Blackstone are all lining themselves up as possible buyers.

Servihabitat manages assets worth almost €50,000 million, according to figures as at 2016. They are mainly owned by CaixaBank and Sareb, and so they are not held on its balance sheet. The firm is mainly dedicated to administering the debt and assets and selling them. In 2016, it recorded total sales of €1,645 million. And between January and September of this year, it recorded turnover of €1,300 million, up by 17% compared to the same period last year.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Oliver Wyman: Mortgage Lending Will Triple By 2020

7 September 2016 – Expansión

Oliver Wyman warns that the banks are once again “relaxing” their criteria for granting home loans.

There is no going back in terms of the re-awakening of the real estate market. All indicators are pointing in favour of a recovery in the sector: GDP is enjoying annual growth of 3.2%, interest rates remain at historically low levels and the banks have started to ease their criteria for lending money in light of the need to give their income statements a boost.

In this context, the consultancy firm Oliver Wyman forecasts that the number of loans granted for house purchases will triple over the next five years to reach 550,000 signings per year by 2020. That figure would be equivalent to the constitution of 1,500 new mortgages per day, up from the current figure of 600 per day.

Behind this recovery in the real estate sector is a forecast acceleration in the creation of new households – the reduction in the level of unemployment will allow, amongst other things, young people to move out of the family home sooner – as well as the demand for homes that has been pent up during the crisis, which could amount to almost 300,000 homes. This last case involves households who have been waiting to buy a property for years, but who have not taken the plunge yet as they wait for the economic environment to improve and the price per square metre to stop falling. (…).

Oliver Wyman considers that its forecast for mortgage signings by 2020 represents the “equilibrium level” for an economy of the size of Spain’s. In other words, according to this company, the signing of 1,500 home loans per day would not result in the creation of a new real estate bubble like the one seen between 2005 and 2007. Between those dates, 1.3 million mortgages were signed in Spain per year: one for every 35 inhabitants.

Nevertheless, the financial consultancy does warn of a number of risks that could damage the local property market. They are linked to the worsening of the economic environment – in part due to the “political instability” that is paralysing the economy – , a sudden increase in Euribor combined with the gradual withdrawal of monetary stimulus at the world level – which would make monthly payments more expensive and which would increase the rate of default – and the granting of more credit to clients with higher risk profiles.

In this sense, the banks are now under pressure to stimulate their mortgage businesses to boost their income statements and face up to the growing competition from new digital agents who are increasingly operating in the sector.

The real estate market is still purging the excesses left over from the first decade of the century. During the second quarter of this year, 20,927 mortgages were foreclosed, which represents a reduction of 27% compared with the same period last year.

Of the total assets foreclosed, 57.1% were homes, and 30.6% of those were primary residences…according to figures published yesterday by Spain’s National Institute of Statistics (INE). In terms of the status of foreclosed homes, 13.6% were new homes, down by 25.1%, and the remainder (86.4%) were second-hand homes, down by 31.2%.

Original story: Expansión (by Victor Martínez)

Translation: Carmel Drake

Cinven Buys Tinsa From Advent International

7 April 2016 – El Mundo

The European private equity house Cinven has signed an agreement to purchase the appraisal company Tinsa from Advent International, which acquired the firm in 2010 for €100 million. The consideration to be paid this time around has not been disclosed. The appraisal company was put up for sale at the beginning of 2016 and since then experts have speculated that the company could be sold for up to €350 million.

Tinsa, created in 1985 and headquartered in Madrid, is the largest property valuation and real estate advisory services company in Spain and Latin America, and performs mortgage appraisals on all kinds of properties, including tertiary and residential assets.

Currently the appraisal company operates in more than 25 countries around the world, with a strong presence in Latin America and dedicated offices in Spain, Portugal, Argentina, Chile, Perú, México and Colombia.

Cinven highlights Tinsa’s in-house technology, which is at the forefront of the market and allows it to offer accurate and efficient valuation solutions to its clients, as well as complementary services, such as energy audits and the monitoring of property developments.

Tinsa has 580 employees and a network of around 2,000 appraisal experts. The company performs more than 300,000 appraisals per year around the world and has more than 100,000 clients, including more than 90% of Spain’s banks.

Cinven also highlights that Tinsa is integrated into the process of its main clients, the banks, and that it plays a key role in the risk assessment process for granting new mortgages. In addition, Cinven indicates that the current onerous regulatory context requires properties to be appraised before any new mortgages can be granted, and imposes periodic valuations of banks’ real estate portfolios. (…).

Moreover, Cinven will inherit Tinsa’s strong management team, led by its Chairman, Ignacio Martos, formerly the CEO of Opodo, the portal that used to be owed by Amadeus, and by its Finance Director, Juan Guerra. (…).

Tinsa represents Cinven’s sixteenth investment through its Fondo 5. Advisors to this operation have included Rothschild y Socios Financieros (financial advisors), Clifford Chance (Cinven’s legal advisor), Uría Menéndez (Advent’s legal advisor), Oliver Wyman (Advent’s commercial advisor), McKinsey (Cinven’s commercial advisor), KPMG (accountant), Deloitte (tax) and Garrigues (employment law).

Original story: El Mundo

Translation: Carmel Drake