July 19, 2018 / 11:22 AM / a month ago

Sabadell nears sale of assets worth 3.3 billion euros after Cerberus deal: source

MADRID (Reuters) - Banco Sabadell (SABE.MC) is close to selling two real estate loan portfolios with a gross value of 3.3 billion euros ($3.8 billion), a source with knowledge of the matter said on Thursday, after it sold two portfolios to Cerberus.

Spain’s property market is enjoying a rebound, although lenders are still struggling to sell real estate debt that soured during a prolonged crisis, often offering face value discounts of around 60 percent.

Sabadell was close to finalizing the sale of a 2.4 billion euro portfolio to Deutsche Bank consisting of loans to real estate developers and SMEs, and another package worth 900 million euros of non-performing real estate assets, the source said.

Deutsche Bank and Banco Sabadell declined to comment.

The real estate assets included in Sabadell’s deal with Cerberus announced on Thursday had a face value of 9.1 billion euros and were sold for 3.9 billion euros after a discount of 58 percent, more-or-less in line with its coverage ratios.

Spanish lenders are actively shedding toxic real estate assets that have weighed on their balance sheets after the bursting of the real estate bubble at the end of 2007.

Spanish banking authorities have been in talks with Sabadell and BBVA (BBVA.MC) to simplify toxic real estate sales at a time when the European Central Bank is pushing banks to clean up their books.

Under the terms of the deal, Sabadell and U.S. fund Cerberus will set up a new company with Cerberus holding an 80 percent share and Sabadell the rest. Sabadell will retain its servicing unit for the assets.

Analysts broadly welcomed the deal, although they highlighted that they expected the upcoming results to be negatively impacted by the recent IT outage at its British unit TSB.

“Although it will have a negative impact of 92 million euros in additional provisions, it should imply the elimination of the bulk of the real estate exposure of the bank, likely giving way to reinforced market confidence on the quality of its assets and its solvency position,” JBCapital Markets said in a note to clients.

Shares in Banco Sabadell were leading the gains on the Ibex-35 with a 2 percent gain, while the European banking STOXX index .SX7P was up 0.2 percent.

Sabadell said it expected the deal to have a positive impact of 13 basis points on its solvency.

As of the end of March, Sabadell had non-performing assets of around 15 billion euros, of which 7.4 billion euros were foreclosed assets.

Reporting By Jesús Aguado; Editing by Hugh Lawson

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