Tag: unsecured

Project Traveler: Sabadell Puts A €500M RE Portfolio Up For Sale

14 October 2016 – Voz Pópuli

Banco Sabadell has taken the lead in the Spanish banking sector once again with the sale of its toxic assets. Over the last few days, the Catalan entity has distributed a teaser (information brochure for investors) detailing a new real estate operation: Project Traveler. The portfolio contains 30 hotels, 30 work in progress real estate developments and other debts to SMEs, according to financial sources.

The operation involves collateral worth €500 million and it is already generating a lot of interest amongst international funds.

With this latest deal, Sabadell now has €1,500 million up for sale, given that straight after the summer, it put Project Normandy on the market, through which it wants to sell doubtful debt amounting to €1,000 million. Following the receipt of non-binding offers, that operation has recently entered its final phase, which will last for around a month.

The entity chaired by Josep Oliu has been one of the most active in recent years in terms of selling problem assets. Sabadell wants to reduce the real estate portfolio that it mainly inherited from the acquisitions that it made during the crisis in Spain, such as CAM, Caixa Penedès and Banco Guizpuzcoano, as quickly as possible.

According to the most recently published figures, as at June 2016, the bank held €19,900 million in problem assets, having reduced that balance by €6,000 million over the last two years. Along with portfolio sales, one of the key elements of the bank’s strategy is the work being performed by its real estate arm Solvia. That entity sells homes through the bank’s network and agents, and is responsible for managing overdue debt.

Project Traveler has attracted attention in the market because it is the second portfolio containing hotels to come onto the market in 2016, after Project Sun, being sold by CaixaBank, which is in the very final stages of negotiation.

Other operations

After the short break at the end of July due to the impact of Brexit on the market, the sale of portfolios has resumed once again in recent weeks. The first operation involved Abanca, which sold €300 million in unpaid mortgages to KKR; and then came Sareb’s return to the market – it is offering investors portfolios worth more than €1,000 million, after a year without any operations following the introduction of the Bank of Spain’s accounting circular.

For the large opportunistic funds, such as Cerberus, Blackstone, Apollo, Bain Capital – formerly Sankaty – and TPG, and the large investment banks, such as Goldman Sachs and Bank of America, these operations represent one of the best ways of making money in Spain at the moment. (…).

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

Abanca Sells €1,400M NPL Portfolio To EOS Spain

14 June 2016 – Expansión

Two years after taking ownership of Abanca, the Venezuelan company Banesco has started to sell off the bank’s toxic assets. Yesterday, the financial entity headquartered in Galicia reported its first sale of non-performing loans, amounting to €1,385 million, which represents approximately 20% of its total NPL portfolio.

All of the loans were overdue and unsecured, which makes it one of the largest operations of its kind in recent years and also, concentrated in a single buyer.

EOS Spain, a company that specialises in collections management was the winner of the competitive process. It is headquartered in A Coruña and is a subsidiary of the international group EOS. The transaction generated profits of €57.4 million for the bank, according to a statement filed with the CNMV.

The auction generated significant interest, with participation from around twenty investment funds and entities specialising in the recovery of overdue debt. For this competitive process, Abanca was advised by KPMG, the same firm that audits its accounts.

The operation (…) will open a series of future transactions as part of Abanca’s strategy to divest of its non-performing assets. In fact, it says that it is already evaluating similar operations for its non-strategic assets, with the aim of focusing the business on providing credit to families and companies and to boosting the economy.

One of the upcoming operations will involve a portfolio of non-performing loans, secured by mortgaged assets, although that will be smaller than the portfolio just sold. By contrast, the bank will hold onto the other overdue unsecured loans so that they can be managed by Abanca itself.

For EOS, the purchase “represents the strengthening of its relationship with Abanca”, according to a statement from the bank, as well as an intensification of competition and an improvement in its position in the domestic market.

Improved capitalisation

The main effect of the sale has been on the solvency of the entity, given that it had fully provisioned all of the non-performing loans that it has now sold. Abanca calculates that with this transaction, it has improved its capital coefficient by five basis points since the first quarter of the year, when it stood at 14.8%, one of the highest in the sector. Meanwhile, the doubtful asset coverage ratio amounted to 60.8% during that same period. According to the annual accounts, Abanca had decreased its doubtful debt balances by 30% last year to €2,695 million as at December 2015; furthermore, it reduced the weight of foreclosed assets on its balance sheet to just 1%.

Of the total impaired asset balance, more than half (€1,900 million) are secured and only €114 million were overdue by three months or less (as at December 2015), according to details disclosed in the consolidated annual accounts for 2015.

Beyond its consolidated balance sheet, the entity accounted for €5,376 million of financial assets that it had written off. The bank explained that it was not including them on its balance sheet because it regarded (the likelihood of) “their recovery to be remote”, although it clarified that it has not stopped trying to collect the amounts due.

Original story: Expansión (by A. Chas and J. Zuloaga)

Translation: Carmel Drake