Tag: provisions

BBVA Reduces the Property Portfolio that it will Transfer to Cerberus by 12%

17 May 2018 – Expansión

BBVA is not holding back in its strategy to reduce its exposure to the real estate sector ahead of putting the finishing touches to its agreement with Cerberus. The entity has already cleaned up some of the portfolio that it will transfer to the US fund in September.

Between the reference date for the operation – the end of June 2017, and March this year, the date of the most recent audited accounts -, the bank has decreased its foreclosed assets by 12% – those assets proceed from unpaid residential and property developer mortgages.

The bank is going to create a joint venture with the US fund to reduce its real estate exposure in Spain to almost zero. BBVA will sell 80% of that joint venture to Cerberus for an estimated price of €4 billion. But that amount may vary, depending on the volume of foreclosed assets that end up being transferred.

Initially, a portfolio with a gross asset value of around €13 billion was defined. By March, the entity’s foreclosed assets balance had decreased to a gross value of €11.541 billion. Most of the portfolio comprises finished buildings and land, which are easier to sell now thanks to the recovery of the real estate sector.

To cover its gross risk, BBVA has recognised provisions amounting to €7.073 billion, which reduces its net exposure to €4.468 billion. The coverage ratio of the foreclosed assets amounts to 61%.

Sources at BBVA explain that the portfolio that is going to be transferred to Cerberus also includes the ‘other real estate assets’ caption. The bank’s gross real estate exposure, including both concepts, amounted to €12.472 billion in March compared with €14.318 billion in June 2017.

Until the close of the operation, which is scheduled for September, the assets to be transferred to the joint venture will not be finalised. “Under no circumstances will transferring fewer assets result in a loss to the income statement. In fact, this operation is not expected to have a significant impact on the income statement”, explain official sources at the entity.

Solvency

The agreement with Cerberus will improve BBVA’s solvency. In March, the bank saw its core capital fully loaded ratio worsen to 10.9%. But the transfer of the real estate portfolio to the fund and the sale of its business in Chile will improve that metric to 11.5%.

BBVA has loaned Cerberus €800 million to finance part of its purchase of the real estate portfolio from the bank. The loan has a term of two years and will not accrue any interest. The fund will repay the debt in a single payment on the maturity date.

Spain’s financial institutions have stepped on the accelerator to clean up property from their balance sheets following Santander’s macro-operation to deconsolidate real estate risk amounting to around €30 billion proceeding from Popular (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Sabadell Cuts its Property-Related Losses by 50% in Q1 2018

3 May 2018 – Eje Prime

Sabadell’s real estate weighs down on its income statement by half as much as it did a year ago. The bank’s losses resulting from the property business decreased from €161.1 million to €84.8 million in just one year, according to figures published by the bank at the end of the first quarter of 2018.

The division of the financial entity that manages its property (the Asset Transformation Unit) recorded a negative result but gave the bank reason to hope. Sabadell justified the improvement to the increase in the gross margin on real estate, which rose by 57%, to €30 million, as well as to the 50% decrease in provisions and the impairment of the portfolios, with respect to the opening quarter of 2017.

Moreover, the bank is continuing to work on cleaning up its balance sheet of toxic assets. Its latest move in this regard involved the launch of a sales process for a real estate portfolio worth €7.5 billion, for which several funds are already bidding. Three of them, Cerberus, Blackstone and Lone Star, have been testing the water with the entity by suggesting that the operation, which is expected to be closed in the summer, should also include its servicer Solvia.

In this sense, during the first quarter, Sabadell increased its coverage ratio over doubtful debt in its real estate business from 56.7% to 62.7%. Thanks to that, the bank is able to apply higher discounts on the sale of its portfolios without having to incur losses that would negatively affect its income statement. Currently, the portfolio of inherited real estate assets that the entity chaired by Josep Oliu still maintains is worth almost €12 billion.

Original story: Eje Prime 

Translation: Carmel Drake

Spain’s Banks Sold Toxic Assets Worth €50.8bn to Funds in 2017

23 April 2018 – La Vanguardia

Last year, Spain led the sale of defaulted mortgage portfolios in Europe, with the sale of loans with a nominal value of €50.758 billion (of the €104.0 billion that were sold in Europe in total), according to a study on problematic real estate debt compiled by the consultancy firm Evercore. In 2017, Santander, with the sale of Popular’s property to Blackstone for €30 billion, and BBVA, with the sale of a portfolio worth €13 billion to Cerberus, were ranked amongst the top five vendors in Europe. “It is likely that we will be leaders in the sale of foreclosed properties and defaulted mortgages again this year and next”, says Íñigo Laspiur, Director of Corporate Finance at the consultancy firm CBRE. “At the moment, portfolios worth more than €8 billion are up for sale in the market”.

During the first few years of the financial crisis, it was entities in Ireland and the United Kingdom that led the sale of foreclosed real estate assets in Europe, but now the Spanish and Italian banks have taken over the baton (the latter led the ranking for the first quarter of this year). “Regulation by the ECB, which has caused provisions to soar, and above all, accounting guidelines, which have forced banks to increase their capital requirements, are accelerating the sales of toxic assets”, said Laspiur. Moreover, these sales are being boosted by the recovery of the real estate market and by the high level of provisions that the banks have now recognised. “Most sales by the banking entities these days make money, or at least, don’t generate losses”.

Laspiur explains how this means that the funds are accepting higher prices for toxic Spanish property: whilst in 2013, when Sareb began its first block sales, they were demanding returns of 15% per annum to buy assets, now the yields have decreased to just 8% when they are purchasing mortgage loans backed by high-quality properties.

Given their large size, the sales of asset portfolios are in the hands of just a few entities. “Only Blackstone, Cerberus, Apollo and Lone Star are bidding for portfolios worth more than €5 billion, whilst firms such as Bain Capital, Oaktree and Deutsche Bank are also very active in smaller operations”, said Laspiur. This lack of competition allows the funds to buy properties at prices well below market rates. “It is not only a question of size” – he adds. “The funds assume the risk of managing the debt (by negotiating with the debtor or in court) to take ownership of the property. It is a sophisticated process that appeals to few companies”. Nevertheless, for the financial institutions, “the sale of foreclosed assets and defaulted loans in large batches allows them to accelerate their cleanups and free up resources because selling them one by one would take years”.

Laspiur says that 2017 marked a turning point in the strategy of the banks to divest property. “Before, they were undertaking small operations. For example, Sareb, the most active entity, has completed more than 30 sales, followed by Sabadell, CaixaBank and Bankia. Nevertheless, last year, Santander and BBVA both created vehicles (companies) to which they transferred their bad assets, and then they sold them, but they retained a minority stake in each case, which allowed them to deconsolidate the assets but hold onto some of the ownership rights in order to benefit from the price rises being seen in the real estate sector”, said Laspiur. “It is a very good formula, and I think we are going to see more operations of a similar ilk this year”. In his opinion, Sareb, CaixaBank and Sabadell are going to be the entities that will lead property sales this year.

Together, the financial institutions in the south of Europe now account for the bulk of the foreclosed properties and defaulted loans in Europe, according to data from the consultancy firm Evercore, which forecasts that operations worth around €80 billion will be closed this year, with Spain leading the ranking once again (at the moment, it accounts for 78% of the portfolios up for sale in Europe, according to the consultancy firm) (…).

Sareb, the European bad asset leader

The Spanish bad bank or Sareb is the largest owner of toxic assets in Europe, according to Evercore, with foreclosed assets amounting to €75 billion, ahead of the bad bank of Ireland (which has €27 billion) and the UK (€20 billion). The hardest hit banks are Italian (Intesa San Paolo, Unicredito, Atlante Fund and Monte dei Paschi) and Greek (Pireus and Alpha) (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Cerberus Wins Bid To Manage & Sell Bankia’s Expanded Real Estate Portfolio

5 March 2018 – La Información

Cerberus has fought off competition from Lindorff to become one of the new Bankia’s partners, responsible for managing and selling its portfolio of foreclosed assets, which now exceeds €5 billion. The group chaired by José Ignacio Goirigolzarri has opted to continue with its existing partner in the end, to the detriment of the partner that has been working with BMN since 2014, for reasons that may go beyond the mere economic bid offered by both, indicate reliable sources.

Bankia’s alliance with Cerberus dates back to 2013, when it acquired its real estate firm Habitat on which it built Haya Real Estate, the servicer, which is now finalising its debut on the stock market after having also been awarded contracts to manage the portfolios of BBVA, Liberbank, Cajamar and Sareb (…).

At that time, almost all of Spain’s financial institutions opted to divest their “servicers” in light of the need to accelerate the sale of their toxic assets and the large appetite of specialist funds to grow in size and contracts. BMN’s story is similar. In 2014, it sold its real estate asset company Inmare to Aktua for €40 million. Aktua was Banesto’s former real estate servicer company, which Lindorff acquired from Centerbridge Partners in a close battle with Apollo and Activum SG Capital Management in 2016.

The Norwegian fund, which is itself currently immersed in an integration process with Intrum Justitia, thus took over the management of the real estate assets of the banking group led by Caja Murcia, as well as of those transferred by BMN to Sareb. The entity now also works for Ibercaja and with certain portfolios from entities such as Santander.

Haya Real Estate and Lindorff’s contracts with their respective clients are similar because they both impose a decade-long period of exclusivity, forcing Bankia to review its position following the absorption of BMN, just like with other types of joint ventures. The bank is going to proceed first to break the contracts and indemnify each partner for a sum estimated to amount to €100 million, according to Expansión, and then it plans to close a new agreement with the winning party. Both partners may have submitted similar bids although it is understood that Aktua offered an exclusively commercial service whilst the agreement with Haya Real Estate included the absorption of the workforce.

The transfer of employees

The new Bankia Group’s property portfolio has a gross value of €5.1 billion, as at the end of 2017, compared with €3.5 billion registered a year earlier excluding BMN’s exposure. The entity has a cushion of provisions that covers 35.9% of its portfolio value in such a way that it could afford to dispose of the portfolio at 64.1% of its initial value without incurring losses. The bulk – 62% – are homes associated with foreclosed mortgages and another 16% are properties received for debt in construction or property development – 48% of that proportion corresponds to land -.

BFA’s subsidiary reduced its problematic assets by 9.9% YoY last year – excluding the incorporation of BMN’s exposure onto its balance sheet – thanks, above all, to sales amounting to €427 million (€5.55 million corresponded to gains) and a 15.3% reduction in doubtful risks.

With the integration of BMN, the bank is being forced to review and rethink all of the contracts where exclusive suppliers operate in both networks. It has already resolved one relating to life insurance, which will see it discontinue BMN’s relationship with Aviva – it will pay that firm €225 million by way of compensation – in favour of Mapfre, which was also victorious in 2016 when the bank came across another duplicate alliance, for the first time (with the same British insurance company, which was also a historical ally of Bancaja). It still needs to settle a similar agreement with Caser, and put the finishing touches to its deals with Lindorff and Cerberus.

Original story: La Información (by Eva Contreras)

Translation: Carmel Drake

Top 5 Socimis’ Earnings Soared by 70% in 2017

1 March 2018 – Expansión

Spain’s large listed Socimis – Merlin, Colonial, Hispania, Lar España and Axiare – are continuing their rise. They closed last year with a combined profit of almost €2.4 billion, which represents an increase of almost 70% with respect to the previous year, after increasing their revenues from rental income by 20%, to €1.1 billion.

These companies, which, with the exception of Colonial, made their debuts on the stock market between March and July 2014, now own assets worth almost €26.4 billion, which represents an increase of 17% with respect to the previous year. The five Socimis also have a combined market valuation of €13.4 billion.

The stars of the year were, once again, the Socimis on the Ibex. Specifically, Merlin doubled its earnings in a record year, to exceed €1.1 billion, whilst Colonial earned €683 million, up by 149%.

The firm led by Ismael Clemente generated a recurring profit – proceeding from the core business – of €289 million, up by 31%, and increased its revenues by 34%, to €470 million. Merlin’s asset portfolio had a gross value of €11.3 billion.

Meanwhile, Colonial, which is going to merge with Axiare during the second half of this year following its successful takeover, recorded a 22% increase in recurring profits, to reach €83 million, boosted by rising rents, a better financial result and a lower corporation tax charge due to its conversion into a Socimi in May last year.

Unlike its rivals, Hispania saw a reduction in its profit of 27% to €228 million, after recognising provisions amounting to €95 million for the payment of incentives to its management firm Azora. Moreover, the company in which George Soros owns a stake registered a negative impact in its accounts amounting to €46 million due to the payment of incentives and the cancellation of guarantees following the purchase from Barceló of 24% of Bay for €172.4 million.

Hispania, which increased its revenues by 9.5% last year, had a portfolio of assets with a gross value of €2.5 billion at the end of the year, compared with €2.0 billion at the end of the previous year.

Meanwhile, the Socimi specialising in retail, Lar España, earned 48% more, at €136 million, thanks primarily to the performance of its shopping centres. The company recorded revenues from rental income of €77.6 million in 2017, up by 29%, and has announced divestments of non-strategic assets amounting to €470 million, including offices, residential properties and logistics assets, in processes that are already underway.

Meanwhile, Axiare’s net profit soared by 47% last year, to €218 million. The Socimi, controlled by Colonial since January, closed 2017 with turnover of €69.7 million, up by 36.6%, and assets worth €1.8 billion.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

BBVA & Sabadell Hold Delicate Negotiations with the FGD to Sell Their Assets

5 February 2018 – Expansión

BBVA and Sabadell want to remove from their balance sheets the damaged real estate assets that they still own as a result of their acquisitions of Unnim and CAM, respectively. Those assets, which have a book value of around €16 billion in total, are temporarily protected by an Asset Protection Scheme (EPA), which, was granted at the time by the Deposit Guarantee Fund (FGD) so that the two banks would take on the business of the former savings banks, which had filed for bankruptcy. The negotiations that the two banks are now holding with the FGD share significant difficulties that cannot be solved easily, although they also have notable differences.

The European Central Bank has been putting pressure on the supervised entities to remove any damaged assets that they still own from their balance sheets, as soon as possible, because it understands that their maintenance reduces the banks’ ability to make profits and lets the doubts continue to hang over the real health of the entities. Now that the ECB considers that the worst of the crisis is over and that the banks are reasonably capitalised, it wants to clear up all the doubts. He has granted a period of five years for these problems to be resolved, although, in reality, it wants them to be sorted in a shorter timeframe: within three years.

When it acquired Popular, Santander launched a procedure to remove all of the real estate assets of its subsidiary from the balance sheet, by reaching an agreement with Blackstone to create a mixed company, in which the US fund holds the majority stake and where Santander has parked assets with a theoretical value of €30 billion. Liberbank has done the same, for a much small sum, retaining just 10% of the capital in its new company.

Meanwhile, BBVA has reached an agreement with Cerberus to transfer €13 billion to a company in which the bank will hold a 20% stake. Of those assets, a significant part, around €4 billion, correspond to assets proceeding from Unnim, which have a guarantee from the FGD for 80% of the losses that may be incurred at the time of their sale.

Meanwhile, Sabadell wants to divest assets worth €12 billion, which sit in a portfolio that is still subject to an EPA that will end in 2021, with the same guarantees as BBVA’s. The difference in the size of the two portfolios is clear.

That is where the problem arises. To close the operation, the FGD needs to accept that it will assume the losses incurred at the time of the sales. And even though its resources have been contributed exclusively by the financial institutions themselves, the public body does not have sufficient funds to assume those losses and whereby avoid grounds for dissolution.

Differences

In reality, the portfolio proceeding from Unnim does not cause excessive problems for several reasons. Firstly, it is smaller and, therefore, the loss to be assumed is considerably reduced. Moreover, according to sources in the know, the FGD has already recognised a coverage for those assets that is pretty close to the market value at which they could be sold (…).

The case of Sabadell, however, is different because the size of its protected portfolio is much larger. It started off at €22 billion and now amounts to just over half, around €12 billion. Sabadell considers that the real value of its assets is approximately half their theoretical value (…) but the FGD (…) maintains that the provisioning need is much lower, around 35% of the book value of those assets.

The difference in criteria between the two parties is important. In figures, it means that there is almost €1.8 billion that separates them and that, of that amount, if it is confirmed in the end, the FGD would have to assume almost €1.5 billion. That would be impossible in the current conditions, because it would mean that the body that guarantees the deposits of banking clients up to €100,000, would have to declare itself bankrupt or, as it has done on other occasions, impose an extraordinary surcharge on its shareholders, domestic entities, to balance its accounts and cover the hole (…).

A solution

But, on the other hand, the FGD is also interested in closing the chapter on asset protection schemes as soon as possible because, until that happens, it will be very difficult to progress with the construction of a European deposit guarantee fund, which is the third leg of the banking union. Indeed, it is not being built precisely because of reluctance being shown by the countries in the north to assume the problems of the past (…).

For this reason, sources close to the conversations confirm that they are now focusing on a possible solution that goes beyond the current moment. The FGD may be interested in reaching an agreement that would entail the possibility of accounting for the losses not in a single year, but rather over a longer period of time, possibly three years. The next few weeks are important because the authorities want to close the conversations before the end of the month.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Spain’s Banks Take Advantage of The Expansive RE Cycle to Sell Properties

21 January 2018 – Efe Empresas

According to Joaquín Robles, analyst at XTB, speaking in an interview with Efe, the banks have waited “for several years for a recovery in house prices” to reduce their exposure to property.

The good health that the real estate sector is currently enjoying is reflected in a study from BBVA Research, which shows that new home prices are expected to rise by 4.9% in 2018. The banking institutions have also decided to reduce their real estate weight due to the changes that have been introduced to international and Spanish accounting legislation.

The new regulations require entities to increase their provisions using own funds to strengthen their capital ratios, with the aim of being more solvent in the event of another possible market crash in the future.

These modifications “will translate into an increase in provisions of 13% on average for the large European banks”, said Robles.

Real estate sales is a correct strategy for the banks

The sale of real estate assets is “a correct strategy from the point of view of banking management”, says the Partner responsible for the Financial Sector at KPMG in EMA and the Head Partner of KPMG Abogados, Javier Uría.

In fact, “the divestment of real estate assets that is happening will result in the strengthening of the sector”, he added.

Spanish banks have reduced their real estate assets in a greater proportion than other European banks, as a result of the effects of the economic crisis and the evolution of the economy.

One example of that is BBVA, which decided to reduce its exposure to property to a minimum, with the sale in November of its Spanish real estate arm to the investment fund Cerberus for €4 billion.

That operation was “hugely important” for BBVA, since it reduced its exposure “to an activity that is unrelated to its core business”, according to comments made at the time by the CEO of the entity, Carlos Torres Vila.

Uría said that Sareb has made an important contribution to this process.

That company, also known as the “bad bank”, was created with the objective of reducing the risks of the financial institutions and orderly liquidating the problem real estate assets within a maximum period of 15 years.

Sareb received almost 200,000 assets worth €50.781 billion, of which 80% were financial assets and 20% were real estate assets.

The income statements of the banking entities will be affected by their real estate divestments in a positive way, since they will result in lower requirements in terms of capital and provisions, as well as in a “reduction in the costs associated with the ownership of these types of assets”, concluded Uría.

Original story: Efe Empresas (by Javier Melguizo)

Translation: Carmel Drake

 

Spain’s Banking Sector Fears ECB Stress Tests

27 November 2017 – Voz Pópuli

Spain’s banks are facing a new perfect storm, albeit on paper. In an already difficult scenario in which the financial institutions are having to adapt to the new provisioning requirements (IFRS 9), they are also having to deal with the upcoming stress tests that are being prepared for 2018.

If we take an analogy by way of example – what is happening in the banking sector is equivalent to what would happen to a student if a decision was taken to change the language of his/her class and then a few months later force him/her to take an entrance exam in that new language. The entities have gone to the wire to try and persuade the authorities to examine them in their native language (based on their current provisions) but the European Banking Authority (EBA) and the ECB have outright refused.

The new provisions mean a radical change in the model. Until now, the banks recognise losses when their loans are impaired, in other words, when non-payments begin. Under the new system, the banks will have to anticipate advance signs of impairment.

A report from the consultancy firm Alvarez & Marsal estimates that the potential impact of the new IFRS 9 provisions on the stress tests is 465 basis points. More than half of that amount will come about in the first of the three years covered by the exercise, which reflects that from now on, crises are going to hit banks faster.

Impact

If we apply these calculations to the latest official figures from the sector (published on Friday as part of the EBA’s transparency exercise), the result in the loss of one-third of the regulatory capital (CET 1). Even so, they are stress test scenarios and so will not necessarily happen.

KutxaBank and Bankia were the entities with the largest buffers in the last year of transparency, with more than 14% of capital, although the group chaired by José Ignacio Gorigiolzarri will see its figure reduce once it completes its takeover of BMN. They are followed in the ranking by Unicaja, Abanca, Sabadell and Liberbank.

Another finding from the data published as part of the transparency exercise is that Spain’s banks have moved away from those of other peripheral countries (Portugal, Italy, Ireland and Greece) in terms of delinquency.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Bankia Analyses Block Sale Of Entire Real Estate Portfolio

7 November 2017 – El Economista

Spain’s banks do not want to pass up the opportunity that currently exists in the market to get rid of their toxic assets linked to the real estate sector as quickly as possible. Funds’ interest in acquiring properties and problem loans continues at the same level as during the summer, when Santander reached an agreement to transfer almost all of Popular’s real estate portfolio, worth €30,000 million in gross terms, to Blackstone.

BBVA announced a few weeks ago that it is negotiating with Cerberus to close a similar operation, although it did not share any details about the perimeter in that case. And now, it is Bankia’s turn to tread the same path and resume Project Big Bang to a certain extent, after it was suspended two years ago. The nationalised entity is currently analysing putting up for sale all of the real estate assets that it still holds on its balance sheet. The transaction would include the assets it inherits from BMN once both groups have merged at the end of this year.

This is one of the “strategic priorities” for the next few months, said Bankia’s CEO, José Sevilla, speaking recently at a press conference with analysts. He assured his audience that investors have an appetite for this type of large portfolio at the moment, unlike two years ago.

Just over €6,000 million of assets

The volume of the operation, if it goes ahead, in the end, will be significantly smaller than the deal closed by Santander, given that both Bankia and BMN have fewer foreclosed assets and doubtful debts. A significant part of their balances was transferred to Sareb in 2012 and 2013, under the framework of the bank rescue. Once the group chaired by José Ignacio Goirigolzarri has absorbed the Levante-based entity, it will have around €6,300 million in loans to property developers and foreclosed assets in total, a third of all the non-profitable assets – which include doubtful loans granted to other sectors.

Specifically, Bankia has €3,150 million in properties, with a coverage ratio of 34%, whilst BMN has €1,470 million, with provisions covering 28% of its risk. In terms of financing to property developers, the volume managed by Bankia amounts to almost €1,100 million and the amount handled by the bank led by Carlos Egea amounts to approximately €600 million.

Commercial focus on companies with a service platform

Between now and the end of the year, Bankia is going to place its commercial focus on the business segment, for which it has created a platform for services that complement financing. According to the director of this business, Gonzalo Alcubilla, access to loans is no longer a concern for companies and so now, they are asking about how to enter new markets and secure new clients to increase their turnover.

In fact, Bankia currently rejects fewer than 10% of the loan requests its receives. In this context, it has created “Soluciona Empresas”, a pack of free digital tools that helps businesses take management decisions, such as advice regarding exporting overseas. The platform may be used both by companies that are clients of the entity as well as by those that are not, according to Alcubilla speaking on Monday at the presentation of the instrument. The tools are grouped together for three purposes: to sell more, manage risks and obtain resources.

Original story: El Economista (by Fernando Tadeo)

Translation: Carmel Drake

Santander Wants To Sell RE Assets Worth €6,000M In 1 Year

30 October 2017 – Voz Pópuli

Banco Santander does not want to stand idly by following the sale of Banco Popular’s real estate. After the completion of that operation (the largest ever real estate transfer in Spain), the entity chaired by Ana Botín wants to continue accelerating its real estate clean up. In this way, it plans to reduce its real estate exposure by more than €6,000 million over the next year.

That would mean that Santander’s real estate balance would decrease by half, given that it currently amounts to around €12,300 million in gross terms (excluding provisions).

According to the bank’s CEO, José Antonio Álvarez, speaking at the results presentation, the objective is for the entity’s real estate exposure “to be immaterial” by the end of 2018.

This immateriality means having a net balance of between €1,000 million and €2,000 million left on the balance sheet within 14 months, besides the rental properties, explained the banker. That, in turn, means selling around €6,000 million (in gross terms) and leaving around €6,000 million on the balance sheet.

The numbers

In this way, Santander España’s net exposure to the real estate market is €5,900 million. The entity has an average coverage ratio of 52% over these assets, which means that their gross value is €12,300 million.

Of those €5,900 million, €3,372 million are foreclosed assets, €1,203 million are rental properties and €1,325 million are delinquent real estate loans.

In August, Santander agreed to transfer almost €30,000 million (in gross terms) of Popular’s property to Blackstone. Specifically, the bank sold 51% of a new real estate company, for €5,100 million and retained ownership of the remaining stake.

In terms of the rest of the real estate assets on its balance sheet, Santander could undertake similar operations, although it will also continue to analyse sales through the retail network and the option of putting properties on the market through Socimis. Both the Spanish bank and its competitors are under pressure from the ECB to get rid of the real estate on their balance sheets as soon as possible.

Meanwhile, Santander is negotiating with Värde Partners, owner of 51% of WiZink, to repurchase Banco Popular’s customer card business and to sell it Barclays and Citi’s business in return.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake