Tag: public aid

Sareb Makes an Extraordinary Debt Repayment of €889M

13 April 2018 – Eje Prime

Sareb is continuing to reduce its debt. The Company for the Management of Assets proceeding from the Restructuring of the Banking System is going to make an extraordinary debt repayment amounting to €889 million, according to a statement issued by the company.

Sareb’s Board of Directors has approved the operation, which is going to be carried out using net cash generated by the business. During its first five years of life, the so-called bad bank has repaid debt amounting to €12,906 million.

When the company was constituted in 2012, it issued debt amounting to around €50,800 million, secured by the Treasury, so as to be able to acquire real estate assets from the nine Spanish banks that received public aid.

To date, Sareb’s debt has been reduced by 25% to stand at €37,875 million. The good performance of the company’s business, which has recorded revenues of €20,700 million during its five-year life, has helped to repay this debt. The entity has reduced its portfolio of assets by €13,602 million, which represents a decrease of 27%.

Original story: Eje Prime

Translation: Carmel Drake

Sareb Recorded Loss Of €663M In 2016 Despite 25% Rise In Property Sales

31 March 2017 – RTVE

Sareb recorded a loss of €663 million in 2016 due to the high costs associated with the maintenance of its portfolio and the sale of its assets at a loss, despite increasing its volume of property sales by 25%.

The entity known as the bad bank highlighted the 1% increase in revenues that it recorded, to reach €3,923 million, which allowed it to reduce its debt by €2,170 million.

The entity’s main source of income last year was its portfolio of loans to property developers, whose management generated revenues of €2,846 million. Almost three-quarters of that amount came from the repayment and sale of loans, collaboration initiatives with the property developers through the Sales Promotion Plans and the sale of properties securing loans.

Finance costs amounted to €558 million

Meanwhile, in the expense caption, the company highlighted that its finance costs carried the most weight, amounting to €558 million.

During 2016, the first year of full operation with the four servicers responsible for managing the entity’s assets (Altamira, Haya, Servihabitat and Solvia), the volume of property sales rose by 25% with respect to 2015, to a total of 14,000 units, including residential assets, land and tertiary properties.

Most of Sareb’s asset sales were concentrated in Madrid, Andalucía and Cataluña

By autonomous region, Madrid, Andalucía, Cataluña and the Community of Valencia accounted for most of the bad bank’s property sales. Similarly, Sareb managed 10,500 proposals relating to the clean-up of its credit portfolio, up by 16% compared to the previous year.

Regarding its real estate business, the company recorded revenues of €1,050 million due to the “commercial dynamism” that was deployed during the first full year of operation of its servicers and to the commercial campaigns that it undertook for new builds, second-hand properties, homes on the coast, plots of land, etc.

Specifically, Sareb’s revenues from these campaigns grew by 85% to reach €220 million. Meanwhile, the number of homes put up for rent increased by 20% to 4,558 units.

Taking stock after four years

Since Sareb was launched in 2013, it has: recorded revenues of €16,864 million, reduced its portfolio by €10,806 million (21.3%); and repaid debt amounting to €9,856 million (19.4%).

Similarly, its cumulative losses during the first four years have amounted to €751 million.

Sources at the entity highlight the contribution that it has made to economic activity in Spain (€14,870 million), primarily by reducing debt, paying interest to entities that received public aid amounting to around €2,800 million and paying taxes amounting to €596 million.

In parallel, the entity explained that it has established a channel of collaboration with the public administrations in the area of social housing, which has allowed it to create a stock of 4,000 homes for social housing, and that 3,000 homes have been handed over already, and around 8,000 people have benefitted as a result.

Original story: RTVE

Translation: Carmel Drake

Sareb Unlikely To Distribute Any Profits To Its Shareholders

30 December 2016 – Expansión

Accounting circular / The Ministry of Finance has softened its demands on Sareb. In exchange, the bad bank’s owners, namely, the State and Spain’s largest banks, will not receive anything for their investments in the bad bank, for at least the next few years.

The Ministry of Finance has softened the situation facing the shareholders of Sareb (the most important of which is the State, through the Frob), by not forcing it to recognise latent losses in its income statement, like it has been obliged to do until now. In exchange, the Ministry has shut down the possibility that these shareholders will receive any results from their investment, even if the company does manage to generate profits at some point.

The harsh situation created by the accounting circular that the Bank of Spain designed for Sareb has barely lasted a year. According to that legislation, Sareb was obliged, within a period of two years, to reappraise all of the assets on its balance sheet (which proceeded from the real estate portfolios of the former savings banks that received public aid) and recognise the latent losses in the income statement each year, given that the price at which it bought those assets was significantly higher than their market prices.

The reality of all of this was seen last year when, in order to avoid near bankruptcy, the bad bank reduced its capital to zero and converted a substantial part of its subordinated debt (€2,171 million) into capital, to offset some of the losses for the year and restore the equity balance. Sareb recognised provisions amounting to €3,900 million in 2015 and recorded capital of €953 million (2% of the balance sheet) and subordinated debt of €1,429 million.

It was expected that something similar would happen this year, although with a less intense effect, given that most of the assets were reappraised in 2015, and that the capital balance would again be reduced and more subordinated debt would be converted into capital.

But to avoid this, the Ministry of Finance has made two significant changes. The first is that Sareb must continue valuing its assets at market prices, but if those values result in the creation of latent losses, then rather than recognise them in the income statement, they should be recorded in the equity statement, whereby reducing the company’s share capital. In parallel, and to avoid the company having to file for insolvency due to an excessive reduction of its capital, Sareb may also benefit from the exception afforded to real estate companies at the height of the crisis, which exempted them from having to comply with a certain relationship between the value of their assets and their own funds. (…).

Two conditions

In exchange for these concessions, which will undoubtedly give Sareb some much needed breathing room, the new legislation from the Ministry of Finance establishes two conditions. The first is that when an asset is sold for below its acquisition price, the real loss must be recognised in the income statement; and the second is that if Sareb generates profits in the future, then whilst the equity account exists in which the latent losses are being reflected, then all of the profits earned must be applied to that account. That means that, in all likelihood, Sareb’s shareholders (…) will not receive anything for their investments in the company over the next few years. And it is reasonable to think that they will never receive anything, given Sareb’s asset composition.

This is the first time that this fact has ever been acknowledged, more or less explicitly. (…).

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Cajamar Puts 2,500 Homes Up For Sale With Discounts Of Up To 30%

21 December 2016 – Expansión

Grupo Cooperativo Cajamar has put more than 2,500 properties up for sale, with discounts of up to 30%. The assets are located all over Spain, including in major regional capitals, commuter cities and small towns, according to a press release issued by the entity yesterday.

This offer from the rural saving banks of the Cajamar group will be known as the ‘Christmas Campaign’ and the discounts will apply until 31 January 2017.

The supply includes both urban and coastal properties, as well as new builds and second-hand homes. Most of the properties are located in Andalucía (890) and the Community of Valencia (790), followed by Madrid (260), Murcia (160), Cataluña (140, 60 of which are located in Tarragona) and Castilla y León (140, 110 in Valladolid).

Doubtful debt rate

As at 30 September 2016, Cajamar’s doubtful debt rate stood at 13.77%. At the height of the crisis, it reached 17%, as a result of the entity’s absorption of Ruralcaja, without any public aid, making it the entity with the second highest rate in the sector in Spain. The doubtful debt rate of its property developer business amounted to 79.04%, well above the average for the sector (25%).

The total number of doubtful assets has decreased by 20.4% in the last year, particularly thanks to the sale of a batch of loans worth €328 million. The coverage ratio amounts to 47.62%. The entry of foreclosed assets onto the balance sheet has decreased by 12.61% in the last year and now amounts to €491 million in gross terms. Sales have increased by 35.62% to €257 million.

Cajamar has an agreement with Haya Real Estate to sell its properties to individuals.

Original story: Expansión

Translation: Carmel Drake

Ibercaja Completes Sale Of Caja 3’s Industrial Portfolio

13 September 2016 – Expansión

Ibercaja is still putting the shine on its balance sheet ahead of its IPO, which is expected to take place at the end of next year or the beginning of 2018. Having transferred the administration and sale of 14,000 real estate assets to the platform Aktua in February, it is now on the verge of getting rid of all of its non-strategic holdings.

According to sources at the group, the bank has divested more than 200 business projects since 2012, which has allowed it to reduce its volume of portfolio investments by approximately €285 million. But the most important achievement is that it has now managed to finalise the investment plan inherited from Caja 3, as defined by Brussels, when that entity received public aid in 2012. 129 companies from the former savings banks were identified with an investment volume of €153 million, which means that Ibercaja is fulfilling all the requirements.

Nevertheless, it still needs to return that aid. Caja 3 received €386 million in contingent convertible bonds (CoCos) signed by the FROB, of which Ibercaja returned €20 million in March. The remaining balance has to be repaid between March and December 2017.

These divestments represent one of the pillars of Ibercaja’s strategic plan for 2015-17, together with the repayment of the aid; the issue of €500 million in subordinated debt from last year; the sale of problem debt to property developers; the transfer of its real estate assets to Aktua; and this year, its growth plan in Madrid; and its digitalisation plan, for which it has signed a strategic agreement with Microsoft.

In fact, within its specific divestment plan for 2015-2017, approximately 100 companies were identified as possible divestment targets, whereby reducing the volume of its investment portfolio by approximately €180 million. Currently, according to sources at the group, it has divested 53 companies, including total and partial sales. In total, it has decreased its investment in corporate projects by €68 million, with a positive contribution to the group’s consolidated result of €10 million. Its profits amount to €23 million since 2012. Meanwhile, sources at the group added that capital amounting to €27 million has also been freed up. In total, own funds have increased by €50 million.

The companies

In addition to the sale of Gestión de Inmuebles Salduvia, which was included in the agreement reached with Aktua in February this year, Ibercaja’s other major divestments include, by order of importance: the divestment of the Naturiber Group (specialising in the meat sector), Portobelio and Ahorro Corporación Infraestructuras (private equity funds), Ahorro Corporación Gestión (the fund manager), Titulización de Activos, Imaginarium (the toy retailer) and ATCA (a technology development company).

Over the next few years, Ibercaja plans to continue executing its divestment plan, which involves more than 50 additional sales, which will allow it to reduce its portfolio by approximately €112 million more, with the resulting positive impact on the income statement and an efficient allocation of capital.

Ibercaja reported profits of €72.3 million during the first six months of 2016, up by 3.7% compared to a year earlier, thanks to the sale of its real estate arm, as well as sales of debt.

Original story: Expansión (by D. Badía)

Translation: Carmel Drake