Funds interested in Project Harvey portfolio
Four International funds are said to be interested in buying up the loans portfolio Project Harvey which contains non-performing loans from big debtors like Grupo Lena and Urbanos.
The funds involved which are Deva, Davidson Kempner, DDM and Bank of America Merrill Lynch have advanced with non-binding offers to buy the bundles of loans according to sources asked by the online news site ECO.
The bank has been undertaking a massive cleanup in order to get NPL loans of its balance books, many inherited from Banco Espírito Santo which collapsed in 2014.
Project Harvey contains NPLs from around 20 big debtors owing around €650 million gross (without impairments).
Many of the names on the list are linked to construction and real estate.
Among the well known debtors are Group Lena (a construction company) and Urbanos (a removals and haulage company) the latter owned by Alfredo Casimiro who owned Groundforce until its control was effectively taken out of his hands by TAP and the government owing to insolvency.
In the case of Lena – now called Grupo NOV – that company suffered huge losses in South America which led to a major restructuring and image cleanup following corruption allegations dating from the José Sócrates government 10 years ago. The loan defaults total €180 million.
The construction company based in Leiria is up for sale after a group of its senior management offered to buy the company for a sum which was rejected by the Resolution Fund (the company is in the hands of the banks) which was set up to keep Novo Banco afloat in terms of cashflow until it could eventually be sold on by the US vulture fund Lone Star which currently controls it.
The outstanding debts from Urbanos total around €9 million.
The funds had to submit their non-binding offers by 8 August. A second phase is now underway at the end of which the interested parties must submit binding offers.
Novo Banco currently has an NPL ratio of around 7% despite efforts in recent years to wipe the slate clean from its legacy from BES. Back in 2014 the new bank had an NPL ratio of 33%.
Novo Banco must now continue to reduce its NPLs to around 5% in line with European Central Bank regulations.
But Novo Banco (75% Lone Star/25% Resolution Fund) is not the only Portuguese bank with real estate NPL portfolios.
Santander and BCP which had luxury Algarve resorts on their toxic debt books also sold NPL bundles to overseas investors and other national banks are preparing to do the same.
The funds and vulture capital companies that buy up NPLs and seized assets, many of them failed tourism resorts and developments, with or without the banks involved, come in, reposition and rebrand them to make them relevant and get out once they have been restructured for sale.
On Monday it was announced in the Portuguese press that Novo Banco was planning an image makeover in preparation for a new chapter in its existence as it is expected to continue to make profits.
The change in look, advertising and message will happen over the next two months with the banks staff being included in coming up with the bank’s new image which will be unveiled at the end of October.