Just deserts
Last week we ran a piece on Blackstone’s Project Quasar, the biggest trade in European NPL history.
It was part of the clean-up of the collapsed Banco Popular Español in 2017, which saw Santander buy the firm for a symbolic euro, after regulators had road-tested the new European bank resolution framework and toasted all the hybrid capital. Even after these writedowns, Santander still fortified itself with a huge rights issue, anxious to bulk up and get well clear of any residual Spanish-banking-system jitters.
But the real heavy lifting in the clean-up came from deconsolidating some €30bn of bad assets to a joint venture with Blackstone. The purchase price was around €10bn. The timeline involved — Project Quasar was announced in August, just two months after Santander swooped in June (second day of Global ABS that year, if memory serves) — suggests that extensive line-by-line diligence would have been tricky to do, even if potential buyers had been circling BPE earlier. The process was competitive
If the seller is motivated and the price is cheap enough, though, in theory you can model to conservative assumptions, write off much of the book as a dud, and still make...
