Liberbank sells €602m NPL portfolio

The portfolio is made up of €342 million in residential assets, land and work-in-progress properties amounting to €180 million and retail assets worth €80 million.

Liberbank, the eighth-largest bank in Spain by market value, has sold a €602 million non-performing property loan portfolio to Bain Capital and Oceanwood.

The Spanish bank will set up a company with the two funds, in which Bain Capital will hold 80 percent of the capital and Oceanwood will own 10.01 percent, with Liberbank holding the remainder.

“This is a great opportunity to participate in Spain’s recovery and to further expand our footprint in the Spanish residential development sector”

– Fabio Longo

The portfolio is made up of €342 million in residential assets, land and work-in-progress properties amounting to €180 million and retail assets worth €80 million. Properties are located throughout Spain, but mainly in Castilla-La Mancha and south of Madrid.

The management of the assets transferred to the company will be handled by Bain Capital upon completion of the transaction, which is expected to be before December.

“We continue to consider Spain one of the most attractive real estate markets in Europe and this portfolio’s concentration in central and northern part of Spain provides a great degree of diversification for our portfolio,” said Fabio Longo, head of Bain Capital Credit’s European non-performing loan & real estate business.

“This is a great opportunity to participate in Spain’s recovery and to further expand our footprint in the Spanish residential development sector,” added Longo.

In Q3, Liberbank sold estate assets with a gross value of €209 million. This, together with the €602 million NPL portfolio sale, will allow the Spanish bank to reach its real estate assets reduction target of more than €800 million in the second half of 2017.

The volume of non-performing loans held by Liberbank declined by 20.2 percent to €649 million from January to June this year. The bank reduced its NPLs by 38.7 percent during the same period a year ago.

Last August, the bank sold its property asset manager to Spanish servicer Haya Real Estate, which is owned by Cerberus. Liberbank said at the time it aimed to achieve a “significant reduction” in its non-performing assets through the sale, as it would focus on its traditional financial business. Haya Real Estate was expected to accelerate the divestment of the bank’s real estate assets.

On 12 June, Spain’s stock market regulator imposed a one-month short-selling ban on Liberbank to prevent a domino effect following the failure of Banco Popular, which was sold to Santander for €1 after the bank’s stock price plunged. Following Santander’s rescue of Popular, it signed a JV deal with Blackstone, through which the US private equity giant acquired a 51 percent stake in the €30 billion portfolio of Popular’s distressed property assets.

Liberbank is trying to reduce its default ratio to below 9 percent in 2017, from the 11.3 percent recorded at the end of June this year. For next year, the bank aims to reach a 5 percent default ratio and 3.5 percent in 2019.