The BBVA announced yesterday that, after receiving the mandatory authorizations, it had closed "the transfer of the real estate business in Spain to Cerberus Capital Management. The transaction has involved the sale of 80% of the capital of Divarian, a company managed by Cerberus ", to which BBVA previously contributed its real estate assets.
However, the bank said that "the effective transfer of some real estate assets is subject to compliance with certain conditions." For this reason, it states that "the final price to be paid by Cerberus will be adjusted according to the assets that are finally contributed". Nor does it specify the specific volume of assets transferred.
After this operation, the bank expects to reduce by 80% the losses of the real estate business in 2018. Thus, if last year it registered red numbers of 501 million, in this exercise the losses will be about 100 million. In 2019 the result of the real estate business will be irrelevant.
According to market sources, the assets pending incorporation into the Cerberus company come from Catalunya Banc and Unnim. The Generalitat of Catalonia has a right of first refusal and the Unnim are awaiting an agreement with the Deposit Guarantee Fund.
BBVA expects that the operation will not have a significant effect on the group's profit, nor on its maximum quality capital levels (CET1) taking into account future demands, which is known in slang as the term fully loaded.
The bank has been managing the operation for almost a year, which was initially announced in November 2017, without also offering the amounts of the assets. Then it was speculated that they could be about 4,000 million, which accounted for 64% of their real estate business.
The new international accounting regulations obliges to raise the provisions on these real estate assets and the European Central Bank is forcing the entities to get rid of the brick, when it is 10 years after the crisis. So far this year, assets have been sold for 77,000 million and experts expect the figure to reach 90,000 million this year, six times more than the previous year.