Spain’s state-held lender Bankia (BKIA.MC) said on Monday it had sold a portfolio of toxic assets with a gross value of 3.1 billion euros ($3.5 billion) to two subsidiaries of U.S. private equity firm Lone Star, confirming a Reuters report on Friday.
The portfolio includes foreclosed assets with a gross book value of 1.65 billion euros and non-performing loans worth 1.42 billion euros, the bank said.
The deal would have a positive effect on the CET 1 capital ratio by about 12 basis points and implies cost savings of slightly more than 200 million euros before taxes during the three years following the closing of the transaction, it said.
It will also recognize additional provisions of around 85 million euros in 2018 as a result of the sale, the bank said.
The transaction is the latest step by the bank, which was bailed out in 2012 via a 22.4-billion-euro rescue package, to shed bad loans built up during and after the Spanish economic crisis which began in 2008 following a burst property bubble.
Spain’s government currently holds a 61 percent stake in the bank, and while it has said it aims to sell that stake by the end of 2019, it has also warned that current market conditions are not right.
The transaction with Lone Star, which will involve the creation of a new company which will hold the assets and be 20 percent held by Bankia and 80 percent by Lone Star Fund XI, will be finalised through the second quarter of 2019.
The economic rights of the non-performing loans will be fully controlled by Lone Star Fund XI, Bankia said.
The deal completes Bankia’s non-performing assets reduction forecasts set in the 2018-2020 strategic plan a year before the original target, the lender said.