Tag: repayment

Bank Of Spain: Loans To Families Rose In H1 2016

2 August 2016 – Expansión

First increase since 2010 / The appeal of consumer loans and lower mortgage repayments is leading to a change in the decreasing loan balance trend. However, business financing decreased due to the political uncertainty.

(…) The latest figures from the Bank of Spain and the financial institutions show that the trend in terms of credit is changing, which could make 2016 the year of recovery in the credit sector.

In this sense, loans to families across the sector grew by 1.04% in June and recorded a half year increase, of 0.02%, for the first time since the start of the crisis. In addition, eight of the eleven Spanish entities that have now presented their results, reported increases in gross loans to clients during the first six months of the year.

These figures show that for the first time, the volume of new loans granted by the entities exceed the volume of repayments, thanks to the liquidity measures led by the European Central Bank (ECB) and the need for entities to grow volumes to offset their decreasing margins.

The last time that Spanish financial entities increased their total loan balance to families was during the first half of 2010, when the international financial crisis had not yet reached the Spanish sector.

In this way, families then held financial debt with Spanish banks amounting to €724,100 million, i.e. €117 million higher than the €723,993 million balance at the end of 2015.

Boost from consumption

This rise comes mainly due a boost from consumer credit in recent months, thanks to the economic recovery and the gradual reduction in unemployment. In this way, the outstanding consumer loan balance increased from €162,000 million at the end of 2015 to €171,00 million at the end of June 2016.

This €9,000 million growth offset the incessant deleveraging of households away from mortgages, which have decreased from more than €549,000 million in December last year to almost €541,000 million at the end of the first half of this year. In other words, a difference of €8,000 million, below the growth in consumption.

These figures reflect a deceleration in the decrease of the outstanding mortgage balance, which has been falling at a rate of more than €25,000 million in recent years. In 2016, repayments have slowed and the granting of new mortgages has increased, as reflected by the new credit data.

The change in the trend of loans to households has not affected financing for companies. That decreased by 1.6% during the first 6 months of the year – from €918,199 million to €903,378 million – due to the opening of other alternatives such as MARG and the issue of bonds, and the deceleration in demand caused by the political uncertainty. That was one of the main concerns expressed by Spanish bankers during the presentations of their half year results. (…).

By entity

(…)The increase in Bankinter’s loan balance (13.7%) was noteworthy, although that figure was impacted by the acquisition of Barclays Portugal, given that the entity does not segregate those numbers. It was followed by Abanca,which reported that its financing balance grew by 4.1%; CaixaBank, with a rise of 1%; and Santander España, with an increase of 0.8%. (…).

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Bankinter Revives Fixed Rate Mortgage War

9 June 2016 – Expansión

A new battle has commenced in the war between the banks to grant fixed rate mortgages. One of the most active entities in the commercial supply of these products, Bankinter, is redoubling its efforts. Yesterday, the bank announced widespread cuts in interest rates on its 5-, 10-, 15- and 20-year mortgages. Bankinter, whose fixed rate mortgages were already amongst the most competitive in the market, has cut the interest rate on its ten-year home loans from 1.75% to 1.6%; on its fifteen-year home loans from 2% to 1.8%; and on its twenty-year home loans from 2.3% to 2.1%.

The zero interest rate environment in the Eurozone has led the banks to offer fixed rate mortgages, given that 12-month Euribor, which is the index to which most floating rate mortgages are linked, is trading at negative rates (-0.018%). In this context, it is more profitable for the banks to offer fixed rate mortgages, given the limited margin they are able obtain on their variable rate products.

The main advantage for customers is that they know the amount of interest they will have to pay on the day they take out the mortgage; that figure is fixed and will not vary for the duration of the mortgage term. In other words, clients are protected against possible interest rate rises, although they would not benefit from any further hypothetical decreases.

Bankinter’s fixed rate mortgage has an arrangement fee of 1%, with a minimum of €350. It also charges a penalty of 0.5% during the first five years of the life of the loan in the event of its total or partial repayment, and of 0.25% thereafter, as well as a commission of 0.75% to offset the interest rate risk, in the event that the early repayment generates a loss of capital for the entity.

If Bankinter’s fixed rate mortgages are taken out to purchase a primary residence, then the value of the loan may not exceed 80% of the purchase price or appraisal value (the lesser of the two amounts). If the product is requested for a secondary residence, then the limit is 60% of the lower of those two values.

In addition, in order to benefit from these interest rates, the bank requires its borrowers to receive their salary into their Bankinter account, as well as to take out life assurance and home insurance with the entity. The applicable interest rates are higher if these products are not contracted.

The reductions also apply to the fixed element of Bankinter’s 15- and 20-year mixed (fixed and floating) rate mortgages, which decrease to 2% and 2.3%, respectively.

Original story: Expansión (by A.R.)

Translation: Carmel Drake

Anticipa Has Accepted 2,400 ‘Daciones En Pago’ In 1 Year

18 April 2016 – El Periódico

Anticipa Real Estate, the real estate manager that the fund Blackstone acquired from CatalunyaCaixa, began by purchasing a portfolio of non-performing mortgage loans from the former savings banks for €3,600 million. The portfolio included 40,000 mortgages worth €6,400 million. In addition, it bought portfolios of property developer loans from Sareb and CaixaBank. Since April 2015, when that operation was closed, Anticipa has worked to recover those loans and the underlying collateral – the repossession of the asset -. During this period, it has signed agreements with 3,000 borrowers, of which 2,400 have resulted in ‘daciones en pago’ – “the handing over of homes in exchange for the cancelation of debt” – and 600 have resulted in the renegotiation of the loan, in such a way that the borrowers can make their mortgage repayments, according to Anticipa’s own summary of its first year of management.

The servicer – which is also responsible for managing the real estate assets of CatalunyaCaixa, now BBVA – bought the portfolio on 15 April 2015 and between then and 30 March 2016, it has closed around 400 operations per month. “We have signed 20 operations per day”, say sources at the entity. “And we have prioritised friendly relationships to enable both parties to reach an agreement”. The entity highlights that this process has been carried out whilst maintaining a good understanding with the platforms of people affected by mortgages (PAH), although they acknowledge that there are certain discrepancies with the PAH in Barcelona, which regards Blackstone as a “vulture” fund, even though it is a long-term real estate investor, which is firmly committed to the rental management business in Spain.

Anticipa highlights that it applies the code of good practice under Spanish legislation, whereby those families who have nowhere to go after a ‘dación en pago’ are offered social housing. In fact, 25% of the borrowers of the 40,000 mortgages pay their monthly instalments on time. Anticipa sends out an invoice each month and collects the corresponding funds. Of the remaining 75%, some (25%) of the borrowers pay intermittently and the rest (50%) do not pay at all. The company prioritises enabling those borrowers who pay intermittently to become regular payers, through the refinancing of their loans. “We apply a partial discount, we amend the term, the interest rate and the loan principal, to reduce the instalment and whereby facilitate the payment”, explains the entity.

Case by case analysis

If the borrower is still unable to pay, he is offered a ‘dación en pago’, and the remaining debt is cancelled in most cases. “Each case is analysed on an individual basis”. Anticipa helps the borrower to find a home if he has to leave or offers him a property to rent “at market price” or by means of “social housing”, as appropriate.

The entity does not rule out mortgage foreclosures when there is no other way of reaching an agreement with the borrower…But, “we have not carried out any evictions”, say sources at the entity…and the objective is to negotiate in order to avoid eviction in all cases”, they add.

Anticipa, led by Eduard Mendiluce…employs 360 people, of which almost 150 are dedicated exclusively to negotiating with borrowers. (…).

Original story: El Periódico (by Max Jiménez Botías and Olga Grau)

Translation: Carmel Drake

Merlin Debuts On Capital Markets With €850M Bond Issue

18 April 2016 – Invertia

The Socimi has debuted on the capital markets with this operation, through which the firm seeks to refinance some of the debt it inherited from Testa.

Specifically, Merlin explains that this debt issue fits within its strategy to reduce the debt it holds after it completed the refinancing of the debt relating to Testa, the real estate company that it acquired from Sacyr, at the end of 2015 .

At that time, the Socimi signed a loan for €1,700 million with ten overseas banks, which was structured into two tranches of €850 million each, one of which is due to expire in December 2017 and which will be repaid through the bond issue.

Merlin is debuting on the debt market after it entered the Ibex 35 at the beginning of this year and managed to achieve an investment grade rating from Standard & Poors, which awarded it a BBB rating.

As such, the debt issue is taking place whilst the Socimi Merlin completes its purchase of the remaining 22% stake of Testa’s share capital, which is still owned by Sacyr, in an operation that must be closed before the end of June, as established in the agreement that the two companies signed last year. The ultimate goal of the company is to merge the two companies to create the largest listed real estate firm.

Original story: Invertia

Translation: Carmel Drake

BFA-Bankia Returns €20.6M To Sareb After Asset Sale

15 January 2016 – Expansión

The amount was distributed in the form of bonds issued by BFA and its subsidiaries amounting to €1.4 million and bonds issued by Bankia and its subsidiaries amounting to €19.2 million.

The BFA-Bankia group has paid back €20 million to Sareb in the form of bonds, after adjusting the perimeter of its asset transfer agreed on 21 December 2012.

According to a statement made by the entity to the CNMV, this amount has been calculated by applying the criteria of the aforementioned contract, which is distributed in the form of €1.4 million in terms of bonds issued by BFA and its subsidiaries and €19.2 million relating to bonds issued by Bankia and its subsidiaries.

The return was made effective yesterday, whilst the actual correction took place on 30 December 2015. In addition, the coupons that the company would have settled prior to the correction settlement date, have been included in the calculation of the bond amount subject to correction.

Original story: Expansión

Translation: Carmel Drake

Home Loans Drop To Lowest Level Since 2006

3 November 2015 – Cinco Días

In November 2008, after fifteen years of continuous growth, the debt held by households peaked at more than €912,000 million. As the economic crisis hit, unemployment rose and wages were devalued, families began to get rid of those liabilities as they tried to rebuild their accounts. And according to statistics from the Bank of Spain, it seems that the process is not over yet. In September, total household debt decreased again to reach its lowest level since 2006 – €728,747 million. The difference between these two figures represents a decrease of €185,000 million.

The collapse of the mortgage market has played a decisive role in this deleveraging process, with mortgages representing more than two thirds of household debt. In November 2008, loans taken out to purchase homes amounted to almost €680,000 million and in the seven years since then, that figure has decreased by 16.5% to reach €567,000 million. A difference of €112,000 million and suggesting the weight of housing in the process to reduce household debt: six out of every ten euros relating to the reduction of household liabilities have corresponded to loans linked to house purchases.

The overall picture of debt in the three major sectors (companies, households and public administrations) shows divergent trends. In November 2008, the figure amounted to €2.6 billion, of which €1.25 billion (48.7%) was in the hands of companies, encouraged by the tax benefits to take out debt and by the facilities that the banks offered on their loans. They were followed by households, with €913,000 million (35.4% of the total), and then public administrations, with €405,740 million (15.7% of the total). By September 2015, the figures and percentages had changed significantly. Now the public sector holds most of the total debt figure (€2.7 billion). In August (the latest available data), public administrations held debt amounting to €1,050,000 million (38.8%), followed by companies, with €927,000 million (34.2%) and households, with €729,000 million (27%).

The two main findings to be drawn from the analysis of this data are that public debt has tripled in both percentage and relative terms, and the speed of the adjustment has been much greater for companies than for families. Company liabilities have decreased by €330,000 million in seven years, which means that its weight over the total Spanish debt has decreased by 14 points in the same period.

Original story: Cinco Días (by Carlos Molina)

Translation: Carmel Drake

Quabit Signs Debt Refinancing Agreement With Sareb

24 September 2015 – El Día

The real estate company Quabit has completed the process to restructure the debt it holds with Sareb (which represents 72% of the group’s financial debt) and postpone the final repayment from 2016 until 2022.

Under this new agreement, Quabit agrees to make an early payment of €35.6 million before the end of the year, which will enable it to free up those assets that have potential for short term development. According to a statement from the company, it plans to develop almost 1,000 homes on those sites.

The signing of this agreement will give Quabit the option to conduct the capital increase, approved by its General Shareholders’ Meeting on 30 June, amounting to approximately €70 million.

At the same time, it involves the postponement of the repayment of the remaining debt until 2022, and establishes a calendar of annual payments, which increase as follows: 5.6% over the next three years; 31.4% over the following three years; and 63% in 2022.

Moreover, the agreement establishes compulsory early repayments of 20% of the debt, both in the event of the amounts received as the result of any capital increase (not applicable to the capital increase approved at the most recent General Shareholders’ Meeting), as well as the operating cash for each financial year.

In addition to the forecast compulsory debt repayments, Quabit may make voluntary early repayments for assets of its own choosing, to release them and individually promote their development and subsequent sale.

According to the President of Quabit, Félix Abánades, the company is poised to become a leading player in the Spanish real estate sector once more.

The signing of this agreement, he adds, will allow the group to manage and develop the company’s assets and to realise the capital increase that it is planning to carry out.

On 10 June, Quabit announced that it will increase its own funds by €189 million over the next few years by activating all of the tax credits it has pending, following the successful conclusion of the capital increase that will be proposed at the company’s next General Shareholders’ Meeting.

Original story: El Día

Translation: Carmel Drake

Colonial Repays €1,040M Loan Early & In Full

8 June 2015 – Expansión

Colonial, the real estate company in which Villar Mir owns a stake, has repaid the syndicated loan that it held amounting to €1,040 million, ahead of time and in full. It used the funds raised from its €1,250 million bond issue, closed at the end of May, to finance the repayment.

Original story: Expansión

Translation: Carmel Drake