28 June 2018 – El Confidencial
Caixabank has followed in the footsteps of Santander and BBVA, as expected, to create a joint venture company with a large international fund to which it is going to transfer a large proportion of its toxic real estate assets.
Specifically, the entity has reached an agreement with Lone Star to transfer to this new jointly-owned vehicle its entire portfolio of foreclosed assets, whose gross value amounts to €12.8 billion, and which in net terms is worth €6.7 billion, as well as the servicer Servihabitat, whose ownership it recovered on 8 June, when it acquired the 51% stake that it had sold to TPG five years ago, and which takes the final amount of the agreement to €7 billion.
Lone Star will own 80% of the share capital of the new company, whilst the financial institution will control the remaining 20%, a structure that will allow CaixaBank to deconsolidate the assets. The deal is expected to have a neutral impact on the bank’s income statement, but will allow it to improve its capital ratio, the ultimate motivation behind these kinds of operations.
Specifically, the agreement with Lone Star will allow the bank to increase its fully loaded CET 1 ratio by 30 basis points, but, given that the purchase of Servihabitat resulted in a hit of 15 points, the net outcome of these two operations will have a final impact of a 15-point improvement.
Pressure from the European Central Bank on Spanish entities to accelerate the real estate clean up have been the trigger for these kinds of operations, since they allow the immediate deconsolidation of million-euro batches of toxic assets, which will be sold gradually through the joint ventures that are being created with the funds, whereby avoiding the need for the entities to recognise greater losses now.
Gonzalo Gortázar (pictured above), CEO of CaixaBank, highlighted that this “operation allows us to fast forward by a couple of years with our strategic objectives of reducing non-performing assets, allowing CaixaBank to position itself as one of the banks with the most healthy balance sheets in the Spanish market”.
The agreement also stipulates that Servihabitat will continue to render services to the bank for five years and the final signing of the agreement with Lone Star still depends on approval from the CNMC – Spain’s National Competition and Markets Commission – for the repurchase of 51% of the servicer, at which point the financial institution will be able to sell the assets onto the new joint company.
For its 80% stake (equivalent to around €5.6 billion based on current numbers), the fund will pay the valuation that the assets have at the time the transfer is definitively closed, which is still pending the corresponding authorisations, in both Spain and Europe, which means that the parties will have to wait until the end of this year or the first quarter of 2019.
CaixaBank expects to achieve cost savings of €550 million before taxes over the next three years, an improvement that also includes the new servicing contract that will be signed with Servihabitat.
Original story: El Confidencial (by Ruth Ugalde)
Translation: Carmel Drake