Tag: rescue

Sareb Supports EBA’s Proposal To Create EU Bad Bank

7 February 2017 – Cinco Días

Last week, the European Banking Authority proposed the creation of a continent-wide bad bank and that initiative has now been approved by the European Central Bank. Brussels can also count on support from Spain, a country that, to a certain extent, has become an essential reference point following the rescue of the Spanish banking sector and the creation of Sareb, the national bad bank.

“The EBA’s proposals echo a lot of our experiences, as well as the lessons learned during the process”, says Íker Beraza (pictured above), Deputy General Director of Finance at Sareb (…).

Sareb allowed Spain’s banks to free themselves from non-performing loans amounting to €50,700 million. It is hoped that this will able to be replicated on a European scale. In Italy alone, NPLs amount to €276,000 million, and in France and Spain, the volume still amounts to more than €140,000 million. In total, Europe’s banks have more than €1 billion in doubtful loans.

The definitive clean up of these balance sheets has become an obsession in Brussels in recent months. And the plans to find the most appropriate way of doing this are accelerating. (…).

A working group between the 28 EU member countries, operating under the chairmanship of the French Treasury, has been debating for six months regarding possible solutions for putting an end to the crisis that is weakening the financial sector, reducing the availability of credit and hampering growth.

Like in previous phases of the crisis, the heated dispute between countries in the north and south is reducing the chances of reaching an agreement. But an air of urgency is starting to dominate and the EBA’s proposal has brought to light buried contracts, with the possibility of transferring up to €250,000 million in non-performing loans to the European bad bank.

Last Friday, high profile representatives from the European Commission, the ECB, central banks and Treasuries, attended a seminar, behind closed doors, regarding “the crisis of the non-performing loans”, organised in Brussels by the Bruegel study centre.

Beraza attended, on behalf of Sareb, as one of the most prominent speakers. “The EBA’s proposal is interesting and we can share important lessons that we have learnt since 2012”, said Beraza.

Beraza said that experience in Spain is proof that “the transfer of assets is a very efficient tool and that in Spain, to date, it has worked out 20 times cheaper than recapitalisation”.

Sareb’s Director considers that the creation of a similar entity on the European scale “would give the system the robustness it needs to handle crises, which have been shown themselves to be almost always systemic, as well as contagious from one country to the next”.

Sources at the European Commission say that the initiative could begin with a first step based on coordination between the national bad banks. The ECB is also keen to establish a common model upfront for the creation of all national banks in the Eurozone.

Moreover, the EBA’s proposal rules out the mutualisation of the potential losses of the European bad bank, which would be borne by the national authorities. This safeguard was introduced to stop Berlin from vetoing the project. (…).

“It is clear”, said Beraza, “that the bad bank model is here to stay in Europe, as an effective tool to be used in the time of crisis”.

Original story: Cinco Días (by Bernardo de Miguel)

Translation: Carmel Drake

Banco de Portugal Chooses Lone Star To Buy Novo Banco

5 January 2017 – ABC

The Board of Directors of Banco de Portugal has selected the US fund Lone Star to participate in the final negotiations to purchase Novo Banco. Its decision is based on the fund’s €770 million proposal, which would be accompanied by a subsequent injection of an equivalent amount to strengthen the bank’s capital.

But Antonio Costa’s Socialist Government will have the last word, and so the complex process is far from complete. Even so, it is clear that Lone Star’s offer is the most attractive, after the bid from the Chinese giant Minsheng was deemed to lack the necessary financial guarantees.

Lone Star’s only competitor in the bidding was an alliance between two other US private equity funds, Apollo and Centerbridge, whose most senior managers travelled to Lisbon to try to complete their negotiations against the clock.

The major difficulty stems from the fact that Lone Star is shielding itself through the creation of a commission bridge that holds Novo Banco’s non-strategic assets. Novo Banco is the cleaned up heir of the now extinct entity Espírito Santo. That situation is something that concerns the Portuguese Finance Minister, Mário Centeno, to such an extent that he has even raised the possibility of nationalising the entity.

In any case, the proposal from Lone Star falls well below the figure required for the operation to be considered a success by the Portuguese State, given that it put €4,900 million on the table in 2014 to avoid the total collapse of the entity when Espírituo Santo went bankrupt that same year.

Original story: ABC (by Francisco Chacón)

Translation: Carmel Drake

Sareb Has Returned €1,000M Assets To Banks

24 June 2016 – Expansión

In recent years, Sareb has found itself with an unexpected line of business as it works to slim down its balance sheet: it has been returning certain assets to the entities that transferred them to it initally. The company chaired by Jaime Echegoyen (pictured above) has returned more than €1,000 million in real estate assets and loans linked to the property sector to groups that transferred it the assets in the first place.

Those €1,000 million represent 2% of Sareb’s balance sheet upon creation – €50,781 million – and 13.5% of the total reduction in its asset value since 2012.

The assets have been returned due to information or appraisal deficiencies made by the transferring entities, at the time of transfer, between 2012 and 2013. Thus, some assets were transferred to Sareb with values that exceeded their real values and other should not have been transferred to the company at all, as they did not meet the requirements.

Financial sources consulted indicated that some personal loans were transferred to Sareb, which had nothing to do with the purpose of the company.

According to Sareb’s annual reports, corrections are made to asset purchase deeds “for the purposes of identifying the improper categorisation of assets, changes in the perimeter and errors or variations in the estimated valuation on the transfer date”.

Bond returns

With these properties and loans, the entities have returned €1,000 million in bonds that they received in exchange for their assets. (…).

Sareb was created at the end of 2012 from the assets of all of the entities that received public aid during the European bank rescue. Firstly, the banks controlled by the Frob – Bankia, Catalunya Banc, Banco de Valencia, NCG Banco and Banco Gallego – transferred their properties and developer loans, and then those entities that had received aid but not been nationalised –Liberbank, Caja 3 and Banco Ceiss, together with BMN– transferred their assets.

Of all of these entities, Catalunya Banc has received the most assets (in return) from Sareb over the last three and a half years. The entity absorbed by BBVA has now been returned €365 million in total, mainly between 2013 and 2014. CB is followed in the ranking by NCG Banco – now Abanca – with €182 million; Bankia with €168 million; and Banco de Valencia – purchased by CaixaBank – with €161 million.

By year, the most active period in terms of property and loan “adjustments” was 2014, when Sareb returned almost €550 million worth of assets to the entities. But the real estate company is still finding problems with the homes and loans that it was transferred, and this year it has already sent back assets worth almost €60 million to Liberbank, Bankia, Caja 3 and Banco Ceiss. (…).

A new tool

Recently, Sareb launched a new internal tool to help it handle all of the assets that it has on its balance sheet and expedite their transfer. It is called Atlas and it performs more than 300,000 valuations each year, automatically, cross checking market data with socio-economic indicators, such as rental income and population size in each place. (…).

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Sareb Curbs Marina d’Or Bankruptcy For 260 Homes

9 March 2016 – Economía Digital

Observers are adopting a wait-and-see policy regarding the final resolution of Comercializadora Mediterránea de Viviendas (Comervi), the development company behind Marina d’Or, owned by Jesús Ger, which filed for voluntary bankruptcy in Commercial Court 1 in Castellón in May 2014.

Everything depends on the decision to be taken by the judge regarding the purchase option submitted by Sareb, the main creditor of Comervi, for 260 homes in the holiday resort, distributed across several developments.

Only then will we know whether the negotiations will resume between the company and the two main creditors, the bad bank itself, chaired by Jaime Echegoyen and Banco Sabadell. The judge’s decision will determine the outcome of the two possible alternatives on offer: try to reach an agreement with the creditors or push ahead with the liquidation of the company.

Sareb and Banco Sabadell are the creditors

Comervi has accumulated financial debt amounting to €125 million. Most of this liability, around €80 million, relates to loans that Sareb received three years ago from Bankia, Banco de Valencia and the former Caixa Galicia.

Almost all of the debt that the construction company, owned by Jesús Ger, holds with Sabadell, around €16 million in total, comes from the loans it inherited from CAM, covered by the Asset Protection Scheme (EPA) that Sabadell received when it acquired the Alicante-based entity in December 2011. This coverage will absorb most of the losses until 2021, ten years after the date it was awarded.

The most indebted company in the Commuity of Valencia

Besides its financial debt, Comervi, the construction company responsible for building the facilities at the Marina d’Or holiday resort, took the honour of being named the Valencian firm that owed the most money to the Public Treasury – more than €46 million – according to the list that the Tax Authorities published at the end of December.

Comervi, which used to be called Construcciones Castellón 2000 and was then called Marina d’Or Loger, was constituted in 1983 by Jesús Ger, who at the time, sold electrical appliances, in order to benefit from the enormous opportunities offered by the construction of apartments on the Castellón coast.

The banks tried to avoid bankruptcy but Ger responded with a solution that was not viable for the creditors, with discounts of more than 50%, the long-term maturity of the remaining debt and even a request for liquidity to take on new projects.

Sareb and the banks said no and the businessman himself decided to file for voluntary bankruptcy for the company.

Original story: Economía Digital (by Juan Carlos Martínez)

Translation: Carmel Drake

Bankia’s Divestment Plan Comes To An End After 400+ Sales

20 April 2015 – Expansión

97% of the plan has been completed / In two years, the entity has transferred 200 investments, 130 real estate companies and 80 loan portfolios, amounting to more than €15,000 million.

Over the last two years, Bankia’s divestment team has had to go to the notary’s office every other day. The intense activity in terms of the sale of investments and loan portfolios has resulted in 400+ transactions since 2013 and the entity is now close to fulfilling the mandate imposed on it by Brussels.

In total, Bankia has transferred 200 financial and industrial investments; 130 real estate companies; and 80 problem loan portfolios, according to sources close to the entity.

Thus, Bankia has already exceeded the target it was set of divesting more than €50,000 million non-strategic assets – by the end of 2014, the figure was close to €59,000 million – but not all of the companies that were agreed as part of its rescue have been transferred. 3% of the plan agreed as part of the rescue still needs to be completed.

In this final sprint, which Bankia has until 2017 to complete, the entity will have to sell off dozens (tens) of real estate and industrial companies, many of which have filed for liquidation and have hardly any value.

Strong reputation

Over the last two years, the team at Bankia, led by the Director of Investments, Manuel Lagares, has earned the respect of foreign investors by closing the sale of portfolios worth €10,000 million and financial and industrial investments, worth €5,500 million.

Although Bankia was forced to make these divestments, the funds value the fact that it is one of the few entities that has not held back from sales processes and that it stands out as one of the best entities to have adapted to demand. Thus, overseas investors recognise that one of the first doors that they call at upon arriving in Spain is that of the bank chaired by José Ignacio Gorigolzarri (pictured above), as well as those of Sareb and the Frob.

Although Bankia has now almost completed its divestment plan, the entity continues to be very active in the market, as it seeks to improve its balance sheet and free up non-productive assets.

Some of the largest transactions conducted by the team at Bankia include the sales of its shares in: Iberdrola, which it sold for €1,500 million; Mapfre, for which it obtained €1,250 million; IAG, for which it earned €675 million; and Indra, which it transferred for €337 million.

Recently, the entity had decided one of the great real estate battles in recent years, which involved Realia, where it agreed to sell its 25% stake to Carlos Slim. It may also decide to transfer its stake in Globalvia soon, for which it is negotiating, together with FCC, with the Malaysian sovereign fund Khazanah Nasional Berhad.

Other transactions

Another transaction in the pipeline involves the sale of City National Bank of Florida, its North American subsidiary, which is pending authorisation by the Federal Reserve.

Together with its investments, Bankia has also transferred lines of business such as its asset manager, which was acquired by Cerberus; and Bankia Bolsa, which it transferred to GVC.

Original story: Expansión (by Jorge Zuloaga)

Translation: Carmel Drake