UPDATE 1-Blackstone to buy bumper Spanish mortgage portfolio - sources

Wed Jul 16, 2014 3:09pm EDT

(Adds details, background)

By Jesús Aguado and Sarah White

MADRID, July 16 (Reuters) - Blackstone has won an auction for a portfolio of home loans belonging to Spain's bailed-out Catalunya Banc, which is being prepared for a sale, three people familiar with the process said on Wednesday.

The U.S. private equity and asset management firm bid around 3.6 billion euros for the package of mortgages, worth around 6.4-billion-euros ($8.7 billion) at face value, two of the sources said.

A consortium led by California-based Oaktree, and groups that included Goldman Sachs and Cerberus, had also vied for the portfolio.

Blackstone, the bank and the FROB, which handles the state's stakes in rescued banks, declined to comment.

The deal should pave the way for the sale of Catalunya Banc, one of several lenders bailed out by the state in the wake of a 2008 property market crash, as the country tries to draw a line under its costly financial crisis.

So far the government has struggled to offload the lender, despite two previous attempts and the grant of 12 billion euros in aid, as potential buyers baulked at taking on Catalunya Banc without extra state funds on top of that.

Spain now hopes the separate sale of the huge portfolio - one of the biggest to ever be sold in Europe - will slim down Catalunya Banc enough to close a sale of the bank, expected by the end of this week.

Domestic players such as Santander, BBVA and Caixabank have said they would be interested in the lender.

Spain's FROB could back the portfolio sale with some funds to save Catalunya Banc from further losses, sources have previously told Reuters.

Catalunya Banc has set aside provisions of roughly 1.9 billion euros on the 6.4 billion euro package of mortgages, almost half of which are in default. That still leaves it with a shortfall if Blackstone buys the portfolio for around 3.6 billion euros, and FROB could plug that gap.

A further 17 percent of the mortgages in the package are in danger of becoming non-performing, or left unserviced for over three months.

Blackstone, which earlier this year closed a 5.1-billion-euro European Real Estate Fund, has already bought property portfolios in Spain. It also paid up to 40 million euros for Catalunya Banc's real estate management unit. ($1 = 0.7393 Euros) (Reporting by Jesus Aguado and Sarah White, Editing by Julien Toyer and Keiron Henderson)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.