Tag: portfolio sales

Sareb Sells 13,000 Properties in Year to August, Up 4.9%

5 October 2018

Sareb sold 12,936 properties in the first eight months of the year, 4.9% more than in the same period in 2017, according to the company’s preliminary data. Of these, 8,017 units corresponded to Sareb’s properties, while the remaining 4,919 were assets that were included as loan guarantees and that developers sold through Sales Revitalization Plans (PDV) to obtain liquidity and reduce or cancel their debt with Sareb.

Of the total amount of properties sold, 87% were residential assets (homes and annexes); 8% were plots of land, and the remaining 3% were commercial properties. Regarding the sales of residential assets, the increase in the sale of homes developed by Sareb stands out – both through the developments on lands owned by Sareb itself, as well as through the completion of unfinished developments-, rebounding by 124% to 1,245 units. The sale of commercial properties also grew by 30% year-on-year in the first eight months of the year, while the sale of land increased by 3%.

Sareb’s operations have allowed it to plough ahead with its mandate to liquidate its portfolio of assets, which, by the end of June, had fallen from its initial high by 28.9%, to 36.128 billion euros, according to the data for the first semester of 2018. Of the total value of the portfolio, 66% corresponds to loans to developers and 34% to other types of properties. The company had also reduced its senior debt by 25.4% to €37.875 billion euros by the end of June.

Between January and June, the period analysed in the report, Sareb sold 10,618 properties, 9% more than in the first half of 2017. Of these, 5,926 were assets of were owned by Sareb itself, and 4,692 were properties that were held as a guarantee.

The largest volume of the residential assets sold that were owned by Sareb was concentrated in Catalonia (19.4%), Comunidad Valenciana (17.7%), Andalucía (14.8%) and Comunidad de Madrid (12.6%), according to the Activity Report for the first semester of 2018.

The company generated revenues of 1.5766 billion euros in the first half of the year, of which 62.4% came from the management and sale of loans, and 37.6% from the activity related to real estate.

In the first semester of 2018, Sareb moved ahead with its configuration of a new territorial structure that will allow it to deepen its knowledge of its portfolio and adapt its supply to the demand found in local markets. At the end of June, the delegations in the Valencian Community and Region of Murcia; and Catalonia, Aragon and the Balearic Islands are fully operational, together with the Madrid Center-Canary Islands delegation, launched in 2016. The delegations of Andalusia and the north-east of Spain will soon start operations aimed at boosting sales in those regions and accelerating the strategy of divestment.

In April, Témpore Properties debuted on the Alternative Stock Market (MAB). The socimi funded by Sareb has a portfolio of some 1,400 homes.

Between January and June, Sareb also continued to promote its real estate development activities, aiming to increase the value of its assets before their eventual sale. At the end of June, the company had invested 99.4 million euros in the completion of unfinished works and the development of its land, which together represented the construction of 6,446 properties.

Original Story: Inmodiário

Translation: Richard Turner

Bankia Begins its Spring Cleaning in Earnest, Selling off Real Estate Assets

31 August 2018

The financial institution has so far lagged behind the other banks’ efforts to unload their portfolios of foreclosed real estate properties.

Since the end of 2014, after having transferred the worst of its assets to Sareb, Bankia has sold €4.2 billion defaulted loans to institutional investors. According to Moody’s, it is the banking institution which has sold off the most assets since then. However, the sales of much of the property inherited by many of Spain’s largest banks to investment funds has left Bankia behind in the clean-up process. The bank still has properties valued at €4.761 billion and another €10.809 billion euros in NPLs (developers and non-developers).

These assets account for roughly 8% of Bankia’s total assets. This percentage contrasts with BBVA, CaixaBank and Sabadell, whose sales have left their exposure at 4% or less, a level considered acceptable by the major rating agencies. They will lower their exposure to that of Bankinter’s in just a few months, which barely financed any developers during the credit boom.

Changed dynamics

BBVA sold a portfolio of 78,000 flats, stores and garages to Cerberus and €1 billion in delinquent loans to a Canadian fund this year. CaixaBank transferred its entire real estate portfolio to Lone Star -leaving out the Banco de Valencia – just holding on to its delinquent loans. Finally, Sabadell’s exposure will fall to just one billion euros of foreclosed properties.

Santander was the institution that began the change, with its sale last summer of most of the assets it inherited from Popular, within a few weeks of acquiring the bank.

Publicly, Bankia’s management has indicated that they will maintain their policy regarding sales of medium-sized portfolios (up to 500 million euros) so as not to generate losses for the bank. This way it may avoid the discounts of between 60% and 80% that the funds have been achieving when acquiring the large portfolios of real estate assets.

So far this year, Bankia sold a €290-million portfolio to Golden Tree, with two more in preparation, one worth €450 million and another €400 million. The merger with BMN added even more toxic assets to the bank’s balance sheet. 71% of the buildings are finished homes, which are more easily sold. Haya Real Estate (Cerberus) is in charge of marketing, with which the bank just renegotiated its contract after the merger with BMN. So far this year, the group has sold apartments and stores worth 309 million euros. The percentage of land in the portfolio is small, at 6.7%. “We were the first to sell portfolios. For the type of asset we have, we believe that the placement of medium-sized portfolios is what gives us the best result in terms of price, because that is where we find more interest and competition from interested buyers,” the CEO of Bankia explained.

As a result, in 2012, Bankia transferred its worst assets (in large part, delinquent loans to developers) to Sareb, the bad bank. It transferred assets worth €22.317 billion, of which €2.850 billion came from its parent BFA. For its part, BMN transferred assets valued at €5.819 billion to the public vehicle.

Sareb applied a 45% discount to the loans to developers, 63% to ongoing developments and 79.5% to land.

The flats and NPLs only generate expenses – payments of local taxes – and no income, therefore decreasing the banks’ profitability. That is why it is so important for the banks to get rid of the real estate as quickly as possible. In the case of BBVA, the bank could double its level of profitability in two years, according to Alantra. Something similar could occur with CaixaBank and Sabadell.

Bankinter’s healthy balance sheet is the reason why it has an ROE ratio (13%) that is much higher than that of its competitors.

An eventual sale of Bankia’s real estate holdings could also help boost its stock market price, to reduce the possible need for public aid, according to analysts.

The firm Keefe, Bruyette & Woods believes that Bankia will continue to have the second-worst ratio of unprofitable assets of Spain’s listed banks in 2019 and 2020, only behind Liberbank.

Santander Spain is in the middle of the group because while it cleaned up Popular, it has yet to follow through on Santander’s own, original exposure.

Original Story: ProOrbyt Expansión – R. Lander

Translation: Richard Turner

 

Sabadell to Sell Solvia As It Unloads Real Estate Assets

30 August 2018

Banc Sabadell is taking offers for Solvia after ruling out placing it together with portfolios of real estate assets.

Unlike Santander and Caixabank, which unloaded most of their real estate assets when they transferred their portfolios of properties to investment funds, Banc Sabadell kept Solvia out of its sale of assets to Cerberus, which was concluded in July. Now, however, the Catalan bank is taking offers for its subsidiary, with an eye on wrapping up the sale within a few months.

Sources in the financial industry told Economia Digital that Sabadell, which is chaired by Josep Oliu, has decided to finalise the sale of its real estate assets through a partial or total sale of its servicer, Solvia. Although it has not yet initiated a formal sales process, the bank reportedly hopes to finalise the deal during the last four months of 2018.

“We are not a property firm, it is not our line of business,” Jaume Guardiola, CEO of Sabadell, has stated on several occasions when asked about the future of the bank’s real estate assets and its property firm, Solvia. Market sources had speculated that Solvia would be sold off together with the bank’s portfoli0 of property, land and related loans. However, Solvia remained in the bank’s hands.

Sabadell decided to leave the property firm out of its sale of the bank’s three property portfolios, worth 11 billion euros. Two of the three were eventually acquired by the venture capital fund Cerberus. The bank held on for a higher price for the servicer and hopes that the asset will help in the sale of the portfolio of properties that it still possesses, which is worth about another €2 billion.

That decision was made just over a month ago, but Guardiola’s position seems to have won, and the bank has put the sale of its property firm on the table again. The idea is that the company will be sold without any included assets, and the sale will be restricted to Solvia’s network and operations, in addition to its roughly 800 employees.

Sabadell has not yet received any formal offers, although Solvia is expected to draw some interest, considering that it is one of Spain’s biggest servicers. Several investment funds are investing in the country’s property market and could be interested in acquiring a servicer.

Solvia, in the hands of a fund?

All the large funds that have acquired real estate assets in Spain already have subsidiary property firms. Cerberus, which bought assets from BBVA and Sabadell, has Haya Real Estate. Apollo, which acquired Santander’s assets, owns Altamira. Lone Star owned Neinor, though it subsequently sold it, it will also acquire Servihabitat when it completes its purchase of 80% of Caixabank real estate assets. Lastly, Blackstone owns Anticipa.

However, other funds are making smaller purchases and could be interested in a property firm such as Solvia to help unload their property holdings in the future. Oaktree, which has acquired several buildings, the Canada Pension Plan Investment Board (CPPIB) and Bain Capital are all possible buyers.

Sabadell waves goodbye to its real estate business

This summer, Banc Sabadell sold a good part of its real estate assets. Of the three large portfolios it had on sale, two went to Cerberus and the third to Deutsche Bank. The assets sold to the investment fund were valued at 9.1 billion euros, while the portfolio that Sabadell sold to the German bank had assets worth €2.4 billion.

Sabadell applied a 57% write-off on the sales, a figure below previous large sales by BBVA and Santander, where the discount exceeded 60%. The banks that waited most, such as Caixabank and Sabadell itself, benefited from the growing interest of investors in Spanish property to sell their holdings at a higher price.

Original Story: Economia Digital – Xavier Alegret

Translation: Richard Turner

 

Slovak Developer J&T Wins Bid for Acquisition of GranCasa and Two Other Shopping Centres

7 August 2018

The Bratislava-based firm has allied itself with Sonae in the acquisition of the Zaragoza complex and others in Bilbao and Santander.

The Slovak real estate firm J&T is preparing for its arrival in Spain with the purchase of three shopping centres, including GranCasa, Zaragoza, in an operation with the Portuguese group Sonae Sierra, estimated at 500 million euros. Sources in the sector confirmed yesterday that J&T, in alliance with Sonae, had outbid the German company ECE for the three complexes and that it will finalise its purchase of the portfolio after completing the corresponding due diligence. The assets also include the Max Center in Bilbao and the Valle Real in Santander.

Sonae, under pressure by its partner in the three centres, CBRE Global Investors, was obligated to sell, though maintaining its intention of continuing to hold a stake. The newspaper Expansión reported yesterday that the Bratislava-based J&T owns 90% of the joint venture created for the purpose with Sonae, while Sonae owns the remaining 10%. Their proposal is said to value the portfolio at approximately 525 million euros, a figure that exceeds ECE’s competing bid. Sonae declined to issue a statement regarding the potential acquisition, limiting itself to saying that “we only discuss finalised transactions.”

The Portuguese group Sonae Sierra took over 50% of GranCasa in 2002, five years after its inauguration, and has been responsible for its management since 2003. The shopping centre located in the Actur, Zaragoza, has more than 200,000 square meters, 80,000 of which are for commercial activity where 170 stores are in operation. There is also a Hipercor, which is not included in the transaction.

GranCasa recently underwent a 12-million-euro investment in a new leisure and restaurant area, which was inaugurated in June. The new space, which measures 10,132 square meters, increased the mall’s offerings to a total of 21 restaurants and five kiosks, complementing existing leisure facilities that include a cinema and gym. The shopping mall’s managers noted that major restaurant chains are or will be maintaining a presence there, including VIPs Smart, Gino’s, The Strad Club, KFC, Muerde la Pasta, Fran Beer and Frutolandia, among others.

Referring to that investment, Alexandre Pessegueiro, head of Asset Management at Sonae Sierra, said GranCasa’s new leisure and restaurant area “is a clear example of how to anticipate changes in consumer models in a sector such as restaurants, in which customers demand an increasing level of differentiation and quality.”

The other two complexes included in the transaction are Max Center, a shopping centre that opened in Bilbao in 1997, and which underwent remodelling in 2000. The shopping mall tenants include Inditex, H&M, Cortefiel, Foster’s Hollywood and La Tagliattela. The centre also has a cinema (Cinesa) and a leisure space next door, Max Ocio.

The third asset is Valle Real, a commercial centre in Santander that opened in 1994 and that in addition to having some of the above brands as tenants, also has a hypermarket of the French chain Carrefour.

The Buyers

J&T Real Estate is a well-regarded Slovak real estate company that has 21 years of experience. The company is headquartered in Bratislava, has 300 employees and a presence in five countries.

Sonae Sierra, which will hold onto 10% of the group, provides services to investors and develops real estate projects anchored in the retail sector. It owns more than 40 shopping centres with a market value of around 7 billion euros and has 83 managed and/or leased shopping centres with 2.5 million square meters of gross leasable area and about 9,300 stores. Sonae currently works with more than 20 co-investors and joint ventures, associating with operators and fund managers for each venture.

Original Story: Heraldo – Luis H. Menéndez

Photo: Guillermo Mestre

Translation: Richard Turner

Sabadell Sacrifices Profits to Clean Up its Balance Sheet & Resolve the TSB Crisis

27 July 2018 – Expansión

Banco Sabadell has decided to sacrifice all of the profit that it obtained in the last quarter to clean up its balance sheet and leave behind the impact of the sale of its real estate portfolios and the complex IT integration of TSB.

The entity chaired by Josep Oliu earned €120.6 million during the first half of the year, a figure that represents a decrease of 67.2% with respect to the same period last year (€317.7 million) as a result of having recognised impairments amounting to €806 million. Nevertheless, if we ignore those extraordinary effects, the bank’s recurring net profit grew by 24.4% to €456.8 million.

The entity decided to take a hit on the income statement for the second quarter with a provision amounting to €177 million resulting from the macro sale operation of a real estate portfolio worth €12.2 billion and which was formalised in July, in other words, in the third quarter. In parallel, it decided to recognise a provision amounting to €92.4 million to deal with future compensation payments to customers of its British subsidiary, TSB, who were affected by problems caused by the connection of a new IT platform developed by Sabadell.

With this measure, the bank wants to shelve the technological crisis that it suffered in the United Kingdom and also leave its balance sheet almost completely free of the toxic assets that it accumulated during the economic crisis. Specifically, during the first six months of 2018, Sabadell decreased its problem assets by €7.012 billion, and by €9.547 billion during the last twelve months. Now, the problem balance amounts to €7.911 billion, of which €6.669 billion are doubtful debts of all kind (not only real estate) and €1.242 billion are foreclosed properties. Thus, the ratio of net problem assets over total assets amounts to 1.7%. The default ratio following the portfolio sales amounts to 4.5%.

As at 30 June 2018, the bank’s fully loaded CET1 capital ratio amounted to 11%, although that will rise to 11.2% following the transfer of the majority of the toxic assets, closed in July.

The bank led by Jaime Guardiola has sold the bulk of its non-performing and foreclosed loans to Cerberus, with whom it is going to create a joint venture in which the fund will hold an 80% stake. The entity has also sold portfolios to Deutsche Bank and to Carval Investors. Solvia has not been included in any of those transactions and will continue to be fully owned by Sabadell.

Between January and June, Sabadell increased the volume of its live loan book by 3.7% thanks to a boost from SMEs and mortgages to individuals in Spain. Customer funds increased by 2.8% YoY driven by demand deposit accounts, which amounted to €105.4 billion. Off-balance sheet funds also grew, by 1.2%, during the quarter, primarily due to investment funds.

During the first half of the year, Sabadell’s interest margin remained stable, given that the entity earned practically the same amount as it did in the six months to June 2017 (€1.81 billion). The bank has been affected by exchange differences and a reduction in results from financial operations (-51%); by contrast, fee income grew by 6%. Thus, the gross margin fell by 8.8% to €2.631 billion.

The reaction of investors to these results has been negative. Sabadell’s share price fell by 2.99%, the third largest drop on the Ibex, to €1.37. So far this year, the bank’s share price has depreciated by more than 14%.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Spain’s Banks Set to Sell €120bn+ in Problem Assets This Year

4 July 2018 – Cinco Días

Spain’s banks are stepping down on the accelerator to put an end to the property hangover, although it will still take another two or three years for them to get rid of all of the excesses left over from the financial crisis. And that is not so much due to the leftover real estate portfolios but more because of the portfolios of non-performing loans, a caption that is continuing to augment the balance sheets of financial institutions.

In this way, the experts hope that this year will see a new record in terms of the sale of portfolios, for an approximate total of €120 billion, including the macro-operations from Santander and BBVA, announced last year but completed this year. Without them, the figure could amount to more than €51 billion, slightly higher than in 2017, which would increase to €80 billion if Sareb manages to sell a €30 billion portfolio.

Pressure from the European Central Bank (ECB) and the Bank of Spain, as well as that exerted by the market itself, is causing financial institutions to opt to sell their portfolios of problem assets in single operations wherever possible, rather than selling them off in a piecemeal fashion, in light of the prospects of rising prices.

Interest from opportunistic funds to invest in Spain and, also forecasts for even greater price rises for real estate assets in the future, are leading the banks to take advantage of the opportunity to clean-up their balance sheets between this year and next, just 10 years after the start of the crisis, explain several experts.

“The funds have large amounts of liquidity. Moreover, interest rates are still at historical minimums (still negative) and so financing can be obtained at very low prices, hence their interest in buying large portfolios of assets linked to property. They want to take advantage of the current climate”, explains Íñigo Laspiur, Director of Corporate Finance CBRE España.

All of the experts agree that the sale by Santander of Popular’s property to Blackstone, an operation announced last year, but ratified at the beginning of this year, for a gross amount of around €30 billion, was the trigger that caused the banks to decide to divest their portfolios on a mass scale.

Since that operation was ratified at the beginning of this year, to date, the banks have divested more than €62 billion in problem assets. That amount includes BBVA’s operation with Cerberus, the fund to which it sold €13 billion. Nevertheless, that operation is still pending approval from the Deposit Guarantee Fund (FGD) since some of it forms part of the Asset Protection Scheme (EPA), having proceeded from the former savings bank Unnim.

Financial sources maintain that there are currently operations underway amounting to another €21 billion, plus an addition €8 billion that may be closed over the coming months. The largest include the sale of around €11 billion in assets from Sabadell (of which €900 million has already been sold to Axactor), whose sale is scheduled for this month.

To these figures another €30 billion gross may be added from the sale of a Sareb portfolio this year if Pedro Sánchez’s Government approves that potential operation in the end. Santander has also put up for sale another €6 billion.

Original story: Cinco Días (by Ángeles Gonzalo Alconada)

Translation: Carmel Drake

Santander Looking to Sell €6 Billion in Real Estate Assets This Month

9 July 2018

Banco Santander has placed a €6-billion portfolio of real estate assets on sale and is aiming to finalise a deal to transfer the assets before August begins, sources close to the process reported.

The sale of the Apple portfolio will allow the group chaired by Ana Botín to finally relieve the burden property-related assets have placed on its operations in Spain. Last summer, shortly after acquiring Banco Popular, Santander reached an agreement to sell Blackstone some 30 billion euros in real estate assets held by the rescued bank.

At that time, Santander opted to create a joint venture with the US fund, 49% owned by the bank, a formula that is “very likely” to be repeated in the current transaction, the sources consulted by Efe agree.

Banco Santander, which has declined to comment on the possible transaction, charged its executives with finalising the huge sale by the end of this month, sources close to the process added. Although there is significant appetite in the market for such assets, it will nevertheless be a major challenge to get it done in such a short time.

Original Story: Eleconomista.es – EFE

Translation: Richard Turner

CBRE: Hotel Investment Plummets by 55% in H1 2018 to €960M

6 July 2018 – Eje Prime

Investment in the hotel sector is dropping down a gear in Spain. Despite the significant growth in tourist rates, investment in the Spanish hotel sector fell by 55% during the first half of 2018 with respect to the same period last year, down to €960 million.

Assets for vacation use accounted for 78% of the total amount disbursed in the sector, which continues to be one of the most sought-after in the world, according to a report from CBRE.

Data from the consultancy firm also highlight that institutional investors are responsible for the majority of the market, accounting for 43% of the spending in Spain between January and June, followed very closely by the hotel groups themselves, with 40% of the market. Family offices only accounted for 12% of operations.

With respect to the first half of 2017, the main changes that CBRE has noted in its report about hotels is the decrease, of up to 90%, in terms of investment undertaken in Barcelona and Madrid. This fact has resulted from a significant decrease in capital investment in urban assets, which decreased from 54% last year to 22% during the first half of this year.

Moreover, three-quarters of the transactions that were undertaken during the first half of 2018 corresponded to the sale and purchase of individual assets, compared with 25% of operations that involved portfolios.

The main investments signed in the Spanish hotel market were Portfolio Alua, for an approximate sum of €165 million; the Ritz Carlton Abama and the Costa del Sol Princess, whose amount was not disclosed; and the €63 million that was disbursed for IFA Interclub Atlantic.

“Interest in the Spanish hotel market has not diminished but it is true that the increase in asset prices and the shortage of opportunities is shifting the focus of investors to secondary destinations, which, also, have performed extremely well in recent months”, explains Jorge Ruiz, National Director of Hotels at CBRE in Spain.

Original story: Eje Prime

Translation: Carmel Drake

BBVA Sells €1-Billion Portfolio of Development Loans to Canadian Fund

16 June 2018

The bank’s real estate exposure in Spain will fall to almost nil by the end of this year, after having been reduced by some 21 billion euros over the last two years.

BBVA is taking its last steps in its quest to eliminate the risk stemming from the toxic assets it inherited from the swift end of the real estate bubble. Yesterday, the bank finalised the sale of a portfolio of loans to developers valued at approximately 1 billion euros to the Canadian pension fund CPPIB, sources in the financial industry stated.

It is the largest sale of a specialised portfolio of loans to developers in the Spanish market. The developments included in the transaction, baptised Sintra, can be found throughout Spain.

The financial institution had been probing the interest of opportunistic funds since the end of 2017, looking to rid itself of a portfolio valued at a gross amount of about 1.5 billion euros, as reported by Expansión. Large funds, such as Lone Star, Blackstone and Apollo, were believed to have been interested in such credits, which are tied to real assets.

PwC advised the bank on the transaction. Official sources at BBVA declined to comment. With this latest sale, BBVA will reduce its exposure to the real estate sector to almost nothing. Pressure from national regulators and the need to free up provisions added to the bank’s efforts to sell off the toxic assets.

Early success

BBVA’s gross exposure to real estate stood at €15.352 billion as of March. Taking into account the sale to the Canadian pension fund and a separate transfer of assets to a company controlled by the fund Cerberus, the bank’s risk linked to property will be reduced to just €1.352 billion. That is €20.783 billion less than at the end of 2016.

The bank will thus achieve its goal of reducing its real estate exposure almost entirely a year and a half ahead of schedule.

BBVA has been one of the most active financial institutions in real estate sales since the beginning of 2017. The most relevant transaction was the bank’s agreement with the American fund Cerberus to create a joint venture in Spain. The operation was negotiated last November and is expected to be finalised in September.

The real estate assets covered in the agreement include some 78,000 properties with a gross book value of €13.billion. Cerberus will control an 80% stake in the company, while the bank will hold on to the remaining 20% while managing to shed the toxic assets from its balance sheet.

However, BBVA has also negotiated several other major real estate transactions. In mid-2017, the bank sold the Jaipur project, another portfolio of loans to developers valued at 600 million euros (total gross debt at nominal value), to Cerberus.

The bank has also reduced its exposure to companies linked to the real estate market. This was apparent in Metrovacesa’s IPO this year, which relieved the bank of its 27% participation in the company.

37% of product sales are conducted online

BBVA has doubled the group’s digital sales. In the first four months of the year, 37.5% of the financial institution’s total sales were conducted through digital channels.

The bank is doubling down on its digital strategy, foreseeing “accelerated and consistent” growth in the number of its customers that access the bank’s products through these channels, it announced yesterday.

The trend has led the bank to bring forward its objectives in its digital transformation. The financial institution expects that 50% of its customers will access its services using digital means by the end of this year or at the beginning of 2019.

In March of this year, when the bank presented its most recent audited accounts, BBVA had 19.3 million customers who used mobiles to access the bank’s products and services, an increase of 43% compared to March 2017. That is equivalent to one-third of its total customer base.

Now, the bank expects to reach the milestone of having half of its customers accessing using digital means.

At the moment, the bank has 24 million customers that access digitally, equal to 45% of its total customer base, a growth of 25% compared to March 2017.

Tangible benefits

The bank argues that its digital strategy has tangible benefits on its accounts by improving efficiency and boosting recurring revenues. In fact, the group is already profitable in all the markets in which it operates, including Spain.

BBVA justifies its digital focus stating that such customers acquire more products and stay loyal.

In fact, they have an abandonment rate that is 57% below that of traditional users. The biggest differences are in Mexico, Turkey and Spain.

Original Story: Expansión – R. Sampedro

Photo: JM Cadenas / Expansión

Translation: Richard Turner

Spain’s Banks Race Against the Clock to Sell Off Their Problem RE Assets

28 May 2018 – Eje Prime

The banks are facing a new record. The entities have cut their problem assets almost in half over the last four years, but now they are trying to get rid of thousands of properties in record time to keep the supervisor happy, along with investors. The Bank of Spain warned just this week that the volume of impaired assets continues to be high, given that foreclosed assets amount to €58 billion and doubtful loans still amount to almost €100 billion, something that concerns the ECB and penalises the sector on the stock market.

Specifically, Spanish banks’ problem assets amounted to €152 billion at the end of 2017, a very high volume, but 46% lower than the €280 billion registered as at December 2013.

In addition to the cost that maintaining these assets on the balance sheet has for entities, they also prevent them from allocating resources to other activities more in keeping with the banking sector that would generate higher returns, which worsens the problems of returns in the sector especially at a time of very low interest rates.

In 2017, in the face of clear pressure on the banks to significantly reduce their problem assets, the Spanish market resurfaced to account for approximately 50% of the European market for the sale of problem assets, recall the experts.

The announcement by Cerberus of its purchase of 80% of BBVA’s problem assets and the acquisition by Blackstone of 51% of Aliseda and of Popular’s non-performing assets clearly marked a turning point.

And currently, taking into account the portfolios that are up for sale and the forecasts for the reduction in non-performing assets in the plans of many Spanish banks, a high volume of transactions is also expected in 2018.

The entities are on the case

Sabadell is planning to decrease its non-performing assets by €2 billion per year until 2020, although, depending on investor appetite and the agreements with the Deposit Guarantee Fund (FGD), that figure may rise considerably in 2018, explain sources at Funcas.

Meanwhile, in its strategic plan for 2018-2020, Bankia is forecasting the sale of €2.9 billion problem assets per year, even though the entity got rid of much of its real estate hangover with the creation of Sareb, the bad bank.

The placement on the market of this significant volume of assets is not only limited to the large entities; it is also involving smaller firms such as Ibercaja and Liberbank, which are also planning to divest assets.

In the case of the former, its plans involve cutting its problem assets in half between now and 2020, which translates into a decrease of around €600 million per year, whilst Liberbank is looking at reductions of €900 million per year until 2020.

For 2018, Santander has set itself the objective of €6 billion, whilst Sareb is aiming for €3 billion, which shows the real commitment that the entities have to cleaning up their balance sheets and to keeping the supervisor, and the markets, happy. Now they just need to deliver.

Original story: Eje Prime

Translation: Carmel Drake