Tag: Project Normandy

Sabadell Considers Selling €1.8 bn Portfolio Whilst it Negotiates with FGD

1 February 2018 – Voz Pópuli

Banco Sabadell is preparing an artillery of divestments over the coming months. The entity chaired by Josep Oliu (pictured above) has been sounding out the market for several weeks now regarding the launch of what would be its largest sale of problem assets to date, worth €1.8 billion, according to financial sources consulted by Vozpópuli.

This operation, which still needs to be approved by the bank’s Board of Directors, would be the precursor to a mega-operation amounting to €12 billion that the entity is considering launching over the next few months, according to Expansión. Sabadell has three mandates granted to launch these divestments in 2018 with Deloitte, KPMG and Alantra.

Nevertheless, these sales have been held up by the Management Committee of the Deposit Guarantee Fund (FGD). The €12 billion that Sabadell wants to sell are precisely those covered by the Asset Protection Scheme (EPA) granted by the semi-public fund during the sale of CAM.

The Management Committee, whose members include bankers from some of Sabadell’s competitor firms, is questioning the sale of the €12 billion because of the hole it would cause in its own accounts. The FGD held equity funds of €1.6 billion at the end of 2016. The same thing is happening with BBVA. In that case, the FGD is considering whether to approve the accelerated sale of assets proceeding from Unnim’s EPA.

Two positions

This story is about two very different positions. On the one hand, Sabadell and BBVA want to bulk sell all of the problem assets that they inherited from the purchases of CAM and Unnim, respectively, in one go. In terms of the danger posed by the end of the EPA, they know that, like happened to Liberbank, when the guarantees end, the unsold assets will affect their capital ratios, by raising the denominator (APRs).

Meanwhile, the FGD is studying the impact that these operations may have and whether the contracts signed at the time allow such accelerated divestments.

Sabadell was one of the most active entities in the sale of problem portfolios last year, with the sale of Project Normandy to Oaktree and Project Voyager to the largest pension fund in Canada.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Sabadell Reports €2,000M In Additional Revenues From Sale Of 2 Portfolios

26 July 2017 – Voz Pópuli

Banco Sabadell is improving its financial figures. The entity chaired by Josep Oliu has closed several divestments over the last few months that will allow it to report extra revenues of €2,000 million this year.

Through this, it wants to avoid the market from drawing comparisons between it and Popular, as happened with Liberbank before the prohibition against trading short positions was introduced. After a few nervous days for the whole sector, Sabadell’s share price rose by more than 5%, following the express rescue of Popular, and its bearish positions decreased.

The divestments have accelerated in recent weeks, with the sale of two portfolios of doubtful debts and of a reinsurance agreement with Swiss Re, as a result of which it has registered proceeds of almost €700 million.

In terms of its portfolios, Sabadell has signed the transfer of two in the last few days. On the one hand, it has almost completed the sale of Project Gregal, with a volume of €800 million, to three funds. That operation was divided into three sub-portfolios: one containing real estate loans to SMEs (€200 million), which was acquired by D. E. Shaw; another containing non-performing loans to individuals, which has been awarded to Lindorff; and another containing non-performing loans to SMEs, which has yet to be sold and for which Cabot, Intrum and PRA are currently competing, according to financial sources. Market sources estimate that Sabadell will receive between €100 million and €150 million for that operation.

Strategic objectives

In addition to Project Gregal, Sabadell has also signed the sale of €950 million in loans to Oaktree, as part of Project Normandy. That operation has been underway for almost a year but has not been signed until now due to (disagreements regarding) the small print. The US fund has paid around €300 million for that portfolio of loans linked to real estate developments.

With these two operations, Sabadell is pushing ahead with its goal to reduce its balance of problematic assets at a rate of €2,000 million per year, per its announcement during the latest update to its strategic plan.

The sale of its subsidiary in the United States will be more important for its capital (which currently stands at 12%), which was announced in March for a value of $1,025 million, with profits of €450 million. That operation is pending approval from the US administrative authorities, which could be granted this quarter.

The same can be said of the reinsurance of a portfolio of individual life-risk insurance, for which Swiss Re has paid €683 million, resulting in net revenues of €250 million for Sabadell.

Original story: Voz Pópuli (by Jorge Zuloaga)

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

Sabadell Sells €1,000M NPL Portfolio To Grove & Lindorff

9 May 2016 – Expansión

Banco Sabadell is accelerating the clean up of its balance sheet / Over the last three years, the bank has sold non-performing debt portfolios worth more than €5,300 million.

Banco Sabadell is establishing itself as one of the most active entities in the sale of large debt portfolios, as it continues to clean up its balance sheet. The bank chaired by Josep Oliu has just closed its first major operation of the year, known as Project Corus, involving the sale of €1,000 million in non-performing loans, which it has already fully provisioned. This is the largest portfolio that Sabadell has brought onto the market to date; none of its previous operations have exceeded €800 million.

The portfolio has been acquired by a consortium comprising Grove Capital Management and Lindorff, which have paid around 5% of the global amount of the loans acquired, in other words, around €50 million. This figure will be recorded as pure profit in Sabadell’s income statement.

The Corus portfolio comprises unsecured doubtful loans relating to consumer debt and credit cards. Grove has acquired €800 million of the portfolio, which it will now manage to try to recover the maximum amount possible. The fund is owned by Blenheim Chalcot and Encore Capital Group – one of the largest collection companies in the world – at the end of 2015, it bought another NPL portfolio, containing €400 million in doubtful debts, from Santander.

Background

Meanwhile, the Norwegian company Lindorff has purchased the remaining €200 million of the Corus portfolio. This fund has also just acquired 94% of the real estate company Aktua, which manages homes and debt on behalf of BMN, Ibercaja and Santander.

It is not the first time that Lindorff has acquired assets from Sabadell. In 2014, the company acquired the bank’s debt recovery division for €162 million, and incorporated the workforce into its own business.

Over the last three years, the bank led by Jaume Guardiola has transferred debt portfolios exceeding €5,300 million to clean up its balance sheet. (…).

By amount, Project Corus is the largest portfolio that Sabadell has put up for sale to date, but it will soon be overtaken by Normandy, a portfolio containing €1,700 million of doubtful real estate loans that the bank is currently evaluating.

Meanwhile, Sabadell has already put another operation on the market, known as Pirene and advised by KPMG, containing €460 million of problem assets linked to property developers.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake