Large funds return to Spain in the bid for loans to SMEs from Santander

The spanish toxic assets They are once again on the radar of large international investors. A competitive process launched by Santander It has brought big names like Cerberus, Bain Capital, Fortress and Deutsche Bank back on the table, after months of little appetite for the portfolios of Spanish banks.

The operation is about the Titan Project, with which the entity chaired by Ana Botín wants to get rid of SME loans valued at 600 million euros. This process has benefited from two circumstances: many of the doubts that existed a year ago about what the economic recovery would be like have already been clarified and investment banks have turned on the credit tap for this type of operation.

Thus, shortly after the outbreak of the pandemic, many large North American entities such as Goldman Sachs, JP Morgan, Morgan Stanley and Bank of America, and other European entities such as Deutsche Bank, decided close the financing tap for this type of operation. They did so in light of the uncertainty of the magnitude that the delinquency crisis was going to have.

The Bank of Spain even predicted that the default rate would skyrocket to 11-14%, from the current 4.5% where it has remained —and even dropped a few tenths—. Measures such as ICO (Official Credit Institute) guarantees and ERTE (temporary employment regulation files).

Reactivation

In the last year, activity has been residual, with one-off operations and at low prices. The stabilization that has been consolidated in recent months makes opportunistic funds and investment banks once again comfortable with making purchases in Spain. What Santander has benefited from in its operation.

This process was launched on the market in September by the hand of Alantra. Between that month and October, the non-binding offers were received and analyzed, which have led to three finalist groups who will bid for Santander’s assets.

They are two consortiums formed by Bain Capital y Fortress and Deutsche Bank, along with Byview and Tilden. Together with them he has also entered to compete Cerberus, one of the largest real estate funds in Spain.

The closing of the sale is expected before the end of the year, so that the financial group can record its effects in the 2021 accounts. This operation is important for Santander twice, since it is the entity with the largest SME business in Spain, after the inheritance of the Banco Popular purchase, and it is one of the entities with the highest delinquencies inherited from the previous crisis, partly also due to the 2017 acquisition.

Therefore, the entity chaired by Botín has accelerated in recent months the sale of toxic credits, becoming the most active Spanish bank in this field. So far this year, it has sold a portfolio of corporate loans – 600 million – to Marathon, a portfolio of mortgages – 200 million – to CPPIB and its exposure in Hesperia – 136 million – to Bybrook.

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