21 January 2016 – Expansión
(…) Following on from Banco Popular’s announcement yesterday that it plans to divest assets worth €8,000 million…. Aliseda, the company ultimately responsible for handling the sale of the real estate assets sitting on Popular’s balance sheet…has been given a mandate to find a buyer for a portfolio of properties with a book value of €4,000 million. The market price of the portfolio has not been revealed.
Aliseda is owned jointly by Banco Popular (which holds 49% of its share capital) and the investment fund Värde, which controls the remaining 51%. During its first round of contacts to identify parties potentially interested in purchasing the property portfolio, the heads of Aliseda have identified half a dozen investment funds that may put forward bids.
In addition to this block sale of properties, Popular’s plans for the divestment of its non-productive assets this year include the sale of another €4,000 million of properties and loans.
The aim is to significantly reduce the non-productive part of its balance sheet. If the forecasts that the entity plans to announce next week at its 2015 results presentation are fulfilled, then Popular will succeed in reducing its problem portfolio by 25% by the end of this year. Such an acheivement would not only lighten the load on its balance sheet, it would also represent the clear implementation of one of the recommendations that the European supervisory authorities are making, with more emphasis on the European banks. That recommendation urges banks to take advantage of the provisioning efforts made in recent years and to sell non-productive assets that are weighing down on their accounts, particularly those that have associated maintenance and financing costs, as they are also penalising their income statements.
In order to put the objective that Popular is setting itself into context, it should be noted that the bank sold properties worth €1,000 million and non-productive assets amounting to €1,500 million during the first nine months of last year (the most recently available public data). Market sources consider that the combination of sales that Popular wants to carry out will have a neutral effect on the income statement, from the perspective of direct revenues, given that the discounts on the net value of the properties included in the portfolio that it wants to sell over the coming weeks will likely be offset by the net revenues that it will obtain from the sale of the other assets to be sold.
Nevertheless, overall, the operation should result in cost savings for Popular amounting to more than €200 million, according to market sources, given that the associated maintenance and operating costs will disappear and there will be no need to make new provisions for the assets sold. Moreover, and, above all, the bank will make significant savings in terms of the financing costs associated with its assets. (…).
Original story: Expansión (by Salvador Arancibia)
Translation: Carmel Drake