Project Bidasoa: Sareb Sells a Land-Backed Debt Portfolio to Bain

16 November 2018 – El Economista

On Friday, the Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb) announced the sale to the fund Bain Capital Credit of a portfolio of loans with a nominal value of €159 million.

The operation, known as Bidasoa, includes loans backed for the most part by land located in various regions of Spain.

The plots that secure the debt are mainly located in Barcelona, in the municipalities of Sant Quirze del Vallés and Viladecans; Cádiz, in La Línea de la Concepción; Málaga (in Manilva) and Madrid.

For the operation, the bad bank has received financial advice from Alantra and legal advice from Bird & Bird.

Original story: El Economista 

Translation: Carmel Drake

The ECB Demands Higher Provisions For Doubtful Debts From 2018

10 October 2017 – Cinco Días

The ECB has proposed a tightening of the provisions required by banks for any loans that they classify as doubtful from 1 January onwards. The ECB has subjected the draft legislation, currently posted on the body’s website, to public consultation. The standards that the supervisor is preparing complement those published in March of this year. In this way, banks will have to set aside more money from 2018 onwards to cover 100% of the loans that they reclassify, in other words, those that go from being standard to doubtful. The ECB will establish different terms depending on the type of loan: those that are secured by a real estate asset may be provisioned at 100% over seven years from the date of their reclassification. For loans without any type of guarantee, entities will have just two years to constitute the 100% provision.

The provisions will be applied on a linear basis from the date of recognition of the doubtful debt until the date the coverage ratio equals 100%, but national supervisors may require the recognition of provisions more quickly in certain cases. Moreover, loans that are partially covered by real estate assets must be provisions in two parts and with two doubtful rates.

In March, the ECB published a handbook for doubtful loans to be applied to portfolios of doubtful loans already in existence. It demanded that entities undertake procedures to reduce this load that, in its opinion, is restricting banks’ ability to grant new loans. The handbook is not binding, but banks will either have to “comply or explain”. In other words, they will have to comply with the handbook or explain why they are not complying with it. It also requires that they set specific objectives to reduce their existing portfolios.

Based on the response from entities and the evolution of doubtful balances, the supervisor will present new proposals,at the end of the first quarter of 2018, to attack the excess volume of toxic loans in the banking sector. According to the supervisor, the so-called “significant entities” (almost all of the banking system in Spain and 130 in total in Europe) held €865,000 million in doubtful assets during the first quarter (after that balance decreased by almost €100,000 million in one year). “Many entities have made significant progress and have submitted credible strategies that include reduction plans, but others still have a way to go to improve”, said the ECB.

In March, doubtful loans accounted for 47.05% of the total bank loan book in Greece, 17.75% in Ireland, 19.82% in Portugal and Italy. Based on this criteria, the figure for Spain amounted to 5.86%, but its level of foreclosed assets was very high.

Original story: Cinco Días (by Nuño Rodrigo Palacios)

Translation: Carmel Drake

Deutsche, Apollo & Cerberus Compete For BBVA’s Largest RE Development

21 June 2017 – Voz Pópuli

BBVA has three multi-million euro deals on the table to acquire some of its problem assets. In the last few days, the entity chaired by Francisco González has received binding offers from three funds to acquire the portfolio known as Project Jaipur, comprising €600 million in unpaid loans linked to real estate developments.

The three candidates to buy this portfolio, the largest that has been placed on the market to date by the entity, are Apollo, Cerberus and Deutsche Bank, according to financial sources consulted by Vozpópuli.

According to the same sources, these funds have put around €200 million on the table, and the best positioned of the three is the German fund, pending the outcome of the negotiations. BBVA and Deutsche both declined to comment. The other two candidates, Apollo and Cerberus, have their own real estate platforms in Spain, Altamira and Haya, and so they almost always analyse these types of operations.

The Spanish bank now has a few days to decide the winner of the bid, although the result will be announced imminently given the interest in closing it before the end of the first half of the year, and thus being able to reflect it in the results that will be presented in a month’s time.

Selling off property

According to the latest figures, at the end of March of this year, BBVA held almost €6,500 million in property developer loans, of which only €1,700 million were up to date. Another €4,750 million were doubtful, with a provisioning level of 56%. Almost all of these loans were secured by land and finished buildings.

In addition, BBVA has another €13,500 million in foreclosed assets, with a coverage ratio of 63%. On Monday, the CEO of the entity, Carlos Torres, insisted that cleaning up this property is one of the group’s major priorities, in order to whereby improve the profitability of Spain. At the presentation of its last results, it announced a period of three years to achieve its goal of cleaning up its balance sheet.

Torres shielded himself behind the property balance to explain why the entity he leads did not present a bid for Banco Popular, after studying its possible purchase together with Banco Santander just two weeks ago. In the end, Popular was acquired by the entity presided over by Ana Botín, for the price of €1, plus a capital increase of €7,000 million.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Axactor Buys Its Fifth Debt Portfolio In Spain For €565M

2 August 2016 – Cinco Días

The Norwegian company Axactor is continuing with its commitment to Spain. Yesterday, it announced the purchase of a new debt portfolio in the Spanish market for €565 million, which represents the company’s fifth operation this year. In this way, Axactor is pushing ahead with its growth strategy in Spain and is strengthening its position as one of the main operators in the debt management sector. Juan Manuel Gutiérrez (pictured above right), Head of Axactor in Spain, confirmed that “ we are totally focused on growth: this acquisition forms part of our plans to continue increasing our presence in the Spanish market, through both the purchase of portfolios and the management of debt for third parties”.

The new debt portfolio acquired by Axactor comprises secured and unsecured loans amounting to €565 million. The portfolio includes almost 30,000 accounts held by individuals and small and medium-sized companies. This acquisition comes after the firm closed another deal in July in the primary market, when it purchased a debt portfolio for €144 million from Banco Mare Nostrum.

Since December 2015, the company has tripled the number of cases under management (from 250,000 to 780,000) and it has quadrupled the total volume of debt under management (from €2,140 million to €9,035 million). Spain has become the fastest growing market for the group and is at the centre of its strategy to become the leader of the debt management market in mainland Europe. Its progress was boosted by the acquisition of Geslico, an operation that allowed the Nordic firm to become the second largest operator in this business segment.

In addition, the incorporation of that company into the group has allowed Axactor to cover the entire value chain of the debt business and has facilitated operations involving collections and debt purchases thanks to a complex IT system to which Axactor has obtained access as a result of the integration of Geslico.

Axactor bought the management company of the former savings banks from the opportunistic fund Fortress, following the US firm’s withdrawal from the country. In this way, Axactor began its international expansion several months ago and chose Spain for that purpose. Its strategy involves becoming the leader of the debt management market in mainland Europe. “Spain has become the launch pad for this strategy and a key market for the Norwegian group”, said the firm, which is listed on the stock exchange.

Original story: Cinco Días (by A.G.)

Translation: Carmel Drake