Project Olympia: CaixaBank Puts €800M Portfolio of Doubtful SME Loans Up for Sale

23 October 2018 – Voz Pópuli

CaixaBank is pushing ahead with its objective to clean up its toxic property. The Catalan entity is holding negotiations with large international funds to sell the largest portfolio of doubtful SME loans to go on the market to date, amounting to €800 million, according to financial sources consulted by Voz Pópuli.

The deal in question is Project Olympia, which CaixaBank wants to close before the end of the year. It includes loans with real estate guarantees granted to small and medium-sized entities.

This operation joins another that the group led by Gonzalo Gortázar has underway and which is in a more advanced phase, Project Orion, comprising €600 million also in doubtful loans to SMEs with real estate guarantees.

In total, CaixaBank wants to clean up almost €1.5 billion before the end of the year and whereby complete the macro-operation signed with Lone Star to sell almost all of its foreclosed assets for €7 billion. After transferring the homes and land, the only assets left to sell are the problem loans, which is exactly what the entity is doing with Olympia and Orion.

Candidates

Unlike with the sale of the foreclosed assets, the favourites to buy the Olympia portfolio are not large fortunes such as Blackstone, Cerberus, Lone Star and Apollo. In this case, intermediate funds are looking at the operation, such as Axactor, Bain Capital, Intrum and D. E. Shaw. The large funds are saving themselves for other operations underway and to close those already signed during the year.

In the case of Olympia, experts in the market calculate that CaixaBank could obtain around €250 million for this package of loans, whilst the price of Orion could amount to €200 million.

With all of these operations, the Catalan entity is expected to end up with a net exposure (after provisions) to real estate of around €10 billion, down from €20.2 billion at the end of last year.

Beyond the pressure from the ECB to follow this path, the strategy is key for the bank this year due to the closure of its current strategic plan. The lower its exposure to property, the greater the profitability of the entities, which is critical in the current environment.

Original story: Voz Pópuli (Jorge Zuloaga)

Translation: Carmel Drake

Project Orion: CaixaBank Launches the Sale of Another €600M in Doubtful Loans

23 July 2018 – Voz Pópuli

CaixaBank’s divestment machine is not shutting down, even for a second. The entity led by Gonzalo Gortázar has just closed the largest real estate sale in its history, a €12.8 billion portfolio, which it has sold to the fund Lone Star, and it has already launched another new operation.

The latest deal is Project Orion, through which CaixaBank wants to transfer a €600 million portfolio of problem loans to opportunistic funds, according to financial sources consulted by Vozpópuli. Unlike on other occasions, the portfolio does not comprise loans to property developers but rather credits to small- and medium-sized entities (SMEs). The loans are secured by real estate collateral, be it property purchased by the delinquent SMEs or other property offered as collateral when asking for a loan for business activity.

Project Orion was launched a few weeks ago and is expected to be closed after the summer. Currently, interested parties are immersed in the non-binding offer phase.

From flats to loans

The former Caixa is placing this portfolio on the market to reduce its volume of doubtful assets, having eliminated its foreclosed assets from its balance sheet. The entity agreed with Lone Star the sale of €12.8 billion in flats, land and developments for €6.7 billion.

On Friday, CaixaBank presents its results for the first half of the year, which will show the first snapshot of the entity following the agreement with Lone Star.

In addition to that agreement, the entity sold a portfolio of €650 million in problem loans to Cerberus, as part of Project Ágora.

Following those operations, CaixaBank is left with €3 billion in rental homes and €13 billion in doubtful loans on its balance sheet, in net terms.

The market expects the entity to make another major divestment of doubtful loans over the coming months, by selling an even larger portfolio than Project Orion. With that, the Catalan entity would be in a strong position to launch its new strategic plan, which it will announce at the end of the year.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake