Banks sell NPL portfolios after six-month hiatus

Portugal’s main high street banks Santander Totta, BPI, BCP and Novobanco have begun marketing various portfolios of Non-Performing Loans after an inactive first half of the year.

The banks are offloading NPLs from their balance sheets in a context where high interest rates on mortgages and corporate loans could lead to an increase in defaults.
ECO reports that Santander Totta has three portfolios for sale: Pool 58, 59 and 60 with a total value of around €130 million. These portfolios include secured and unsecured mortgages. There are three investors in the running with the first binding phase ending today.
BPI has a bundle of NPLs in the Citrus portfolio which includes a mix of problematic loans, some unsecured, for a similar value to that of Santander Totta. There are four potential buyers on the shortlist which have to make binding offers by July 6.
Novobanco is selling €100 million of debt from Heliportugal, which was planned to be sold as part of Project Harvey, which was postponed on the request of the Resolution Fund.
The bank is now conducting a single names sale of assets in the portfolio instead of as a batch.
After NPL sales of €1.7Bn in 2022, a fall of 45% on 2021 according to data from real estate consultants Prime Yield, the Portuguese NPLs market could fall even lower in 2023.
Caixa Geral de Depósitos was one of the few banks that did sell NPL portfolios in H1 and its current sales are worth €400 million and market operators speak of a year that fell short of expectations.
In recent years Portugal’s banks have made a considerable effort to clear NPLs of their balances after five year ago when they had €31.8Bn of bad loans on their books, corresponding to 13.6% of total loans. That ratio fell to 3% at the end of last year, below the acceptable 5%, to a total of €6.5Bn.