Bankia Entrusts the Sale of 3 NPL Portfolios Worth c. €1bn to KPMG

3 March 2019 – El Confidencial

Bankia is on course to fulfil one of the objectives of its strategic plan a year early. Two years ago, the entity set itself the target of divesting almost €9 billion from its balance sheet between 2018 and 2020, and last year alone, it sold problem assets worth €6 billion. With the sales forecast for this year, it is set to achieve its goal a year ahead of schedule.

In this context, the entity is launching the sale of three portfolios, worth around €1 billion, with the aim of selling them in the middle of this year.

The largest portfolio, worth around €500 million, comprises doubtful property developer loans; the next, worth around €200 million, contains unsecured debt; and the final one, worth several hundreds of millions, has yet to be defined. All three have been entrusted to KPMG for their sale.

Despite its huge efforts last year, Bankia still has around €8 billion in doubtful loans and €3 billion in foreclosed assets on its balance sheet.

Original story: El Confidencial (by Jorge Zuloaga)

Summary/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

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

Cerberus Sees Five More Years Of Portfolio Sales In Europe

9 May 2016 – Expansión

The largest opportunistic fund thinks that the market will remain active in Europe for another five years. That was the view, expressed last week, by the Head of the US fund Cerberus, the investor that has acquired the most toxic debt from banks and governments in Europe.

“I expect the opportunity to buy doubtful loans to last for at least another five years. In baseball terms, we are still in the early innings”, said John Snow (pictured above), the co-founder and CEO of Cerberus.

Last year, according to Bloomberg, the fund invested €28,000 million in debt in Europe, including Northern Rock mortgages, which were sold by the British Government.

Cerberus is also one of the most active international investors in Spain.

In recent years, it has acquired two platforms, which themselves buy problem assets from banks: Haya Real Estate, the former Bankia Habitat, for the management of real estate assets; and Gescobro, for the management of unsecured debt.

In Spain in recent years, besides these two platforms, Cerberus has also acquired AyT, the securitisation fund manager owned by Ahorro Corporación and Cecabank; Cimenta2, the real estate arm of Cajamar; and the firm Patron Properties.

Advisors

The fund relies on several high profile advisors for its strategy in Spain, including Juan Hoyos Martínez de Irujo, the former President of McKinsey España; Francisco Luzón, the former CEO of Santander; Manuel González Cid, the former Financial Director of BBVA; Francisco Lamas, a former Director at McKinsey; and José María Aznar Botella, the son of the former President of the Government.

Cerberus came close to signing one of the largest deals in Spain last year. The US fund offered Bankia just over €2,000 million for a 75% stake in its foreclosed assets, as part of Project Big Bang, which was eventually suspended by the entity chaired by José Ignacio Goirigolzarri.

Original story: Expansión (by J. Z.)

Translation: Carmel Drake