Banks Sell €11,000M NPLs To Clean Up Their B/Ss

30 June 2016 – El Confidencial

Property is still the main obstacle facing Spain’s banks. Although the majority of the domestic financial entities will comfortably pass the European Central Bank (ECB)’s upcoming stress test, most are still weighed down by non-performing loans linked to the real estate sector, which are blackening their balance sheets. To this end, CaixaBank, Bankia, Sabadell, Popular and even Deutsche Bank have put portfolios of non-performing loans up for sale amounting to almost €11,000 million, according to data compiled by El Confidencial.

The most active bank is Sabadell, which has engaged KPMG, PwC and N+1 to help get rid of €3,100 million in consumer loans, credit cards and loans granted to property developers. Of that amount, €1,000 million was sold to the funds Lindorff and Grove Capital last month in an operation known as Corus. Now, the entity has another €1,700 million on the market (Project Normandy), containing foreclosed loans from real estate developers and almost €500 million (Pirenee) corresponding to a mixture of assets. The entity is looking to close both transactions before the summer holidays.

After Sabadell, the most active bank in cleaning up its balance sheet is CaixaBank, which has two processes underway and one in the bag. These include the so-called “Project Carlit”, launched in April with the help of PwC to sell off €750 million in loans linked to shopping centres, offices and the industrial sector; and “Project Sun”, a portfolio of loans granted to almost 150 hotels that the entity foreclosed from businessmen in the sector. In total, around €1,000 million in non-performing loans.

The latter is backed by 11,000 tourist rooms, and several opportunistic funds may be interested, including Starwood, Davidson Kempner Capital and Bank of America. Those entities previously acquired similar liabilities from Bankia in 2014 and 2015 for €1,200 million. In Septemeber, the Catalan entity is planning to launch “Project More 2” containing €200 million of real estate loans, again with the help of PwC.

Bankia, which last year failed to find a buyer for its huge real estate portfolio containing €4,800 million of assets has engaged KPMG, Deloitte and PwC to advise it in 3 of its operations: “Project Lane” (€288 million), “Project Oceana” (€396 million) and “Project Tizona” (€1,000 million). The latter comprises residential mortgages and is the second part of the transaction known as “Project Wind”, when the entity sold €1,300 million in similar liabilities to the fund Oaktree.

Alongside these three major players, several other entities also have operations on the market, including Popular, Banca Mare Nostrum, Abanca (which just sold €1,300 million in NPLs to EOS) and Ibercaja…But the entity that has drawn the most attention is Deutsche Bank, because it had not chosen to clean up its accounts in this way until now. The German group, the only foreign bank with a presence in Spain, which has an extensive network of offices, is sounding out institutional investors regarding the sale of €800 million in non-performing mortgages.

Although the German entity was not greatly impacted by the real estate crash, thanks to its prudent strategy vis-à-vis granting property-related loans, the truth is that it was weighed down by packages of unpaid loans from high income clients. Antonio Rodríguez-Pina, Chairman of the bank’s Spanish subsidiary, has decided to get rid of these NPLs in order to improve its balance sheet and reduce the default ratio, a measure that coincides with Deutsche Bank’s decision to continue its operations in Spain, for the time being. (…).

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake

Project Babieca: Bankia Puts €672M Portfolio Up For Sale

21 October 2015 – Idealista

Bankia has put another debt portfolio up for sale, worth almost €700 million and secured primarily by commercial assets (offices and shops), land and industrial assets. The project has been named ‘Babieca’ like the legendary horse of the hero El Cid Campeador.

Bankia is continuing with the process to reduce the real estate exposure on its balance sheet and to that end, has put another loan portfolio up for sale, a technique that has been used all over the world, during the process to clean up the financial sector. In this case, the so-called ‘Project Babieca’ is in the hands of the consultancy firm PwC, which is looking to place the portfolio, worth €672 million, with international investors, according to financial sources consulted.

The portfolio comprises 3 different sub-portfolios, but Bankia hopes to sell them all to a single buyer:

Portfolio Jimena: contains loans amounting to €115 million, primarily secured by land (specifically, 81% is guaranteed). This debt is shared between 9 borrowers, none of which have filed for insolvency to date.

Portfolio Elvira: contains debt amounting to €172 million, of which 78% is backed by commercial assets (offices and shops) and industrial assets. This debt is distributed between 40 borrowers, of which 18 have fallen into arrears.

Portfolio Sol: contains debt amounting to €384 million, of which 73% is secured by commercial assets. This tranche is spread between 30 borrowers, 22 of which are solvent.

According to the sources consulted, Bankia expects to receive non-binding offers from a handful of investors by the middle of October and to receive binding offers by the middle of November. In this way, it hopes to close the sale of this package in December.

If it manages to complete the sale before the end of the year, Bankia will be able to add the achievement to another sale it has already completed of another debt portfolio worth €1,300 million, which mainly contained doubtful mortgages to individuals. That package known as ‘Project Wind’ was awarded to the funds Oaktree and Chenavari (in July).

Bankia has also closed another operation this year, the sale to Bank of America of a hotel debt portfolio at the beginning of June. That operation, known as ‘Project Castle’ comprised 91 operations linked to 45 assets. 56% of the total portfolio related to doubtful debts.

In addition, Bankia has another package of real estate assets up for sale at the moment, the so-called ‘Project Big Bang’, which includes a portfolio of residential and commercial assets and land, worth €4,800 million. This is a sale that the bank is also looking to accelerate and one that would represent the largest sale of real estate assets since the real estate bubble burst.

Original story: Idealista (by P. Martínez-Almeida)

Translation: Carmel Drake

Apollo, Oaktree & Elliott Buy 1,000 Homes & 5,000 Mortgages

7 July 2015 – Expansión

Overseas funds are becoming the new owners of banks’ problem homes and mortgages. In recent weeks, Bankia, BMN and Bankinter have all signed deals – or are close to doing so – to transfer almost 5,000 mortgages and 1,000 homes to five international funds.

According to financial sources, Apollo, Oaktree and Elliott have invested the most in the transactions, although the funds Chenavari and Ellington are also close to finalising agreements.

These sales could just be the tip of the iceberg, since many of the banks currently have divestment projects underway, with the aim of transferring more than 50,000 homes to large investors.

The largest transaction to have gained momentum in recent days is Bankia’s Project Wind – the portfolio contains 4,300 mortgages to individual borrowers and it will be sold to the funds Oaktree and Chenavari. This sale is just awaiting its formal signing and the investors are expected to pay between €250 million and €300 million for the portfolio.

New transactions

BMN has also finalised agreements in recent days, for the transfer of two portfolios. The first is Project Coronas, which contains 550 homes located all over Spain, but primarily in coastal (beach) regions. The US fund Apollo has acquired this portfolio for €16 million. It represents the fund’s first major purchase of this kind since it purchased 85% of the Altamira platform from Santander.

Moreover, the entity chaired by Carlos Egea (BMN) has also sold a portfolio of problem loans, including almost 500 mortgages, of which three quarters relate to individual borrowers and the remainder to SMEs. This project, known as Pampa, has been awarded to a fund that has so far had little presence in Spain: the US fund Ellington Management, which specialises in the purchase of overdue mortgages. This investor bought a small portfolio from Barclays in Spain a few years ago.

Meanwhile, Bankinter has closed the sale of 300 homes to the US fund Elliott. The portfolio was initially valued at €60 million. It is Elliott’s first property-related purchase; until now the fund had focused on the NPL segment through its Spanish platform Gesif.

With these kinds of transactions, overseas funds are looking to capitalise on their purchases of large real estate platforms, for which they have so far paid around €3,100 million.

With that in mind, the Spanish financial institutions have initiated the sale of other large foreclosed asset portfolios, such as Bankia’s Big Bang portfolio, with 46,000 real estate units. Sabadell and Popular will also sell portfolios of homes in the near future.

Besides the sale of mortgages and foreclosed assets, Spanish entities are selling large portfolios of loans to property developers and hotel debt, as part of their objective to continue divesting property from their balance sheets. Financial institutions such as Santander, BBVA and CaixaBank all have sales projects of this kind underway.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Sells €1,300M Loan Portfolio To Oaktree & Chenavari

6 July 2015 –

As the summer approaches, many financial entities are stepping down on the accelerator to sell their unwanted real estate portfolios as soon as possible. To this end, Bankia has just sold a portfolio known as ‘Project Wind’ to the funds Oaktree and Chenavari, in a mega-transaction worth €1,300 million, which primarily contains doubtful mortgages to individual borrowers.

The transaction actually comprises three different portfolios, which have been shared between the US fund Oaktree and the British fund Chenavari, although according to financial sources, the signing of the sale is still pending:

  1. Portfolio Mast: €918 million of unpaid mortgages from individual borrowers, which has been shared between Oaktree and Chenavari.
  2. Portfolio Board: €178 million of debt backed by real estate collateral, which has been awarded to Oaktree.
  3. Portfolio Find: €216 million of unsecured debt without any real estate collateral. There are lots of lines of credit in this package. It has been awarded to Chenavari.

This transaction follows Bankia’s sale of another portfolio, containing hotel debt, to Bank of America at the beginning of June. That operation, known as ‘Project Castle’, comprised 91 operations, in total, linked to 45 assets. 56% of that portfolio related to doubtful debts.

But Bankia also has another packet of real estate assets up for sale, the so-called ‘Project Big Bang’, which includes a portfolio of residential and commercial assets, as well as land, worth €4,800 million. The bank is very keen to accelerate the sale of that portfolio, which would represent the largest sale of real estate assets since the real estate bubble burst.

CaixaBank is also selling off property

2015 is turning into the year of the large real estate transactions. CaixaBank has put several portfolios up for sale. One of those contains new-builds, known as Project ‘Tourmalet’ and it contains loans secured by 271 completed new residential developments, 160 plots of land and work-in-progress residential developments. The packet is worth close to €1,000 million.

Another package up for sale is the so-called ‘Eurostars’ portfolio containing 1,091 assets, including 807 homes, 253 parking spaces, 26 storerooms and 5 commercial premises. It is worth almost €103 million and the transaction is being managed by the real estate consultancy JLL.

Original story: (by P. Martínez Almeida)

Translation: Carmel Drake

Bankia Sells Hotel Loan Portfolio To BofA & Hedge Fund

5 June 2015 – Expansión

Project Castle / Following the sale of Realia, Bankia has now made profits of €926 million from the transfer of its investments.

Yesterday, Bankia closed the first sale of a loan portfolio since the regional and local elections, which have been threatening to destabilise the market. Far from that, the entity has managed to attract a US hedge fund (to the market), which has not closed any deals in Spain until now, namely: Davidson Kempner Capital Management (DK Capital).

This fund and Bank of America (BofA) have won the auction for Project Castle against other large international investors. This portfolio, whose sale has been advised by N+1 and the law firm Ramón y Cajal, comprises hotel loans worth €383 million. In total, the portfolio contains 91 loans linked to 45 properties of this type.

Bank of America will take ownership of the performing loans and DK Capital the doubtful loans. These types of hedge fund are renowned for carrying out aggressive restructurings of loans to take ownership of the assets and, subsequently sell them at a profit.


Sources at Bankia highlight that the transaction: frees up resources for the granting of new credit; increases the bank’s liquidity; and contributes to an improvement in the quality of the assets. Moreover, it will have a positive impact on capital (at the height of the Basel III implementation) amounting to €21 million.

As well as Project Castle, Bankia is also advancing with Project Big Bang, containing €4,800 million foreclosed assets for sale; and Project Wind, with €1,300 million doubtful loans, primarily mortgages to individuals.

These divestments come after Bankia sold its 24.9% stake in Realia to Carlos Slim on Wednesday. Bankia has now made profits of around €926 million on the sale of all of its investments in listed companies, such as Iberdrola, Mapfre, Deoleo and NH Hoteles.

The transactions closed since 2013 have generated revenues for the entity of €4,879 million, according to the company’s own data.

Having exited as a shareholder of Realia, Bankia now only retains minor industrial holdings, such as in the infrastructure concession group Globalvía, in which it holds a 50% stake alongside FCC, although these two shareholders are expected to close the sale of that company to the Malaysian sovereign fund during the course of this year.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake

Sankaty Finalises Purchase Of 40 Large Loans From Bankia

6 May 2015 – Expansión

During 2015, Bankia has become an important focus point for international funds. Along with the sale of properties amounting to €4,800 million, the nationalised entity has launched three other large sales processes to divest non-strategic assets: one contains hotel debt – Project Castle; another involves problem mortgages – Project Wind; and the third includes large loans to real estate companies – Project Commander. The last of these is likely to close first, since the US fund Sankaty, a subsidiary of Bain Capital, is now in exclusive negotiations to seal the purchase and may sign an agreement in the next few days.

If the agreement comes to fruition, the investor will acquire 170 loans granted to 39 companies linked to the property sector. Of those, 31 are property developers that have filed for bankruptcy or liquidation. The portfolio include several loans granted to companies such as the Catalan firm Promociones Habitat.

Most of the loans are syndicated and bilateral, secured by rural land and industrial warehouses. The nominal value of the portfolio amounts to €500 million. Sankaty already acquired one portfolio from Bankia last year, together with the hotel investment giant Starwood. They paid the bank €400 million for hotel and real estate loans.

Original story: Expansión

Translation: Carmel Drake