Banks planning to sell RE assets for over 12.5 billion in two years

Banks are setting 2020 as a goal to drop RE assets remaining in their balances to the lowest. Among the strategic plans of Bankia, Liberbank, Ibercaja and the commercial venues portfolio set on sale by Santander, the entities plan to de-invest at least 12.5 billion Euros in NPEs in the next 24 months.

For the time being, Caixabank’s objectives to be set are pending. The entity will do so next November 27th in London when it presents its new strategic plan, while Banco Santander has delayed the presentation of its new objectives to Q1 2019, after we know how last October’s elections in Brazil turned out. The Brexit, to happen next March, is important for the group.

The Spanish entities have stepped on their real estate de-investment in the past 15 months. Banco Sabadell sold in the summer 4 NPEs portfolio, for a joint face value of 12.2 Billion. These operations allowed the entity to match in a single stroke with the Strategic Plan 2018-2020 to drop by 2 billion per year its Non-performing assets (NPEs).

At the end of Q3 of this year, the entity led by Mr. Josep Oliu would keep 13.630 billion in toxic assets, nevertheless, once the sales that took place in summer, the exposition will drop by half, to 7.667 billion, most of them non-performing loans. Exposition to awarded assets dropped to 1.2 billion.

 

Orderly drop

In regards to Bankia, the entity projected its Strategic Plan to 2020, a yearly drop of NPEs of 2.9 billion, which would imply a cleanup worth 8.7 billion in three years. The bank led by Mr. José Ignacio Goirigolzarri has deinvested in the three first quarters of the year 2.4 billion euros according to the last accounts at the end of September, only 500 million left for this quarter.

Therefore, along with the 2.9 billion to de-invest between 2019 and 2020 respectively, we’d have to add 6.3 billion to be cleaned, yet. In the same way, Liberbank closed Q3 of the year with gross NPEs worth 3.6 billion euros, 25% less that what it held a year prior.

The bank set itself the target to bring its balance sheet to 1.7 billion at the end of 2020, that is 1.9 billion less than what it currently holds. Finally, Ibercaja that also presented its goals for 2020 in March, announced a preview of drop of its toxic assets of 50%, in three years, which would amount to 1.850 billion less.

15 fast months

Santander kicked off the race of asset transfe4rs with 50% of the real estate from Popular to Blackstone, in an operation announced last August 2017. Ever since, the largest sale from the bank was a portfolio of apartments and garages to Cerberus last September, for a purchase price of around 1.535 billion euros. Thus, the bank still has a second awarded portfolio with a gross face value of 2.4 billion.

Currently, the bank has 9.7 billion of these assets in its balance sheet, although when those sales become effective, they may drop to 2.3 billion, a minimal exposure in their balances.

Caixabank and BBVA have also been featured in the largest NPEs deinvestments. Caixabank, entity led by Mr. Jordi Gual, announced in September the transfer of 80% of its Real Estate to the Lone Star fund, which also would leave the value of its awarded assets to 600 net million, once the operation is closed.

Nevertheless, the gross position of distressed debt and awarded assets would be around 2.5 billion. On their end, BBVA also announced at the end of last year, the transfer of 80% of its NPEs to Cerberus, an operation closed last September and that will soon show in their balance sheet.

The most active investment funds in the portfolio purchase in the last few months have been Cerberus, Blackstone and Lone Star. Among themselves, they amount purchases fro 48 billion euros of awarded assets and distressed assets from Spanish banks and Sareb. Specifically, Cerberus acquired 80% of Sabadell’s RE, with 80% of two awarded assets portfolios from Sabadell valued in 9.1 gross billion, and another residentials portfolio from Santander worth 2.5 billion euros.

Blackstone has 51% of the real estate from Banco Popular, a percentage valued in 15.8 billion euros. Finally, Lone Star purchased 80% of the business from Caixabank, valued in 10.240 billion. Deutsche Bank has purchased this year portfolios from Sareb, Caixabank and Sabadell, valued in 3.6 billion.

Source: El Economista. Translation by Miguel Vinuesa Magnet.

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