Santander To Close Real Estate Bubble Cycle In Spain Subsidiary

Santander offloads toxic housing assetsSantander offloads toxic housing assets
According to sources close to the operation, Santander has put on sale a portfolio of 6 billion euros of housing assets, and hopes to close the agreement on their transfer this month. The portfolio, known as Apple, will allow the group President Ana Botín more or less to put an end to the housing burden on its subsidiary in Spain. Last summer, just after acquiring Banco Popular, Santander agreed to sell to Blackstone 30 billion euros worth of housing assets originating in Popular.
At that moment Santander decided to creat a joint company with the American fund in which Santander held 49%.  According to sources consulted by EFE, this formula is “very likely” to be used again.

The North American fund is a regular of this kind of operation. In Europe a few months ago it acquired the assets of Bradford&Bingley and three years ago it acquired the mortgage portfolio of Catalunya Bank for 4.123 billion euros, so that BBVA could advance the integration of the financial business of the old Catalan savings bank.

Although there is considerable appetite in the market, it will still be a major challenge for Santander to complete this major sale this month.

The decision is conditioned by two motives: the pressure from supervisors – they are threatening penalties because of the new provisioning rules – and the great appetite of investment funds, who have acquired 67 billion euros of housing assets in the last five years.

Following the steps of Caixabank and Sabadell

Financial entities have made the headlines this summer for accelerating this type of operations. Catalan banks have been the main example.

On 28 June Caixabank announced that it was offloading 7 billion euros of its toxic assets. It placed its housing business in an operation structured in two parts: 80% of housing assets and the subsidiary Servihabitat, repossessed on 8 June.

Sabadell, for its part, finalized the sale of its toxic property assets shared between four portfolios: Challenger, the largest, with assets valued at 5 billion euros; Coliseum and Makalu of 2.5 billion euros and Galerna, already sold to Axactor for 900 million euros.