European Banks Look to Sale Leasebacks for Liquidity Amid Tight Capital Markets

Property Week - December 5, 2008

European banks have embarked on a slew of sale and leasebacks in an attempt to raise cash amid the global economic turmoil.

Collapsed Belgian bank Fortis, BBVA and Banco Sabadell have all put portfolios on the market.

Almost every other top European bank, from Italy’s UniCredito to Royal Bank of Scotland in the UK, is also scrutinising its property holdings to see where money can be made.

A report by Merrill Lynch found that Europe’s leading banks need to raise a further €73bn (£61bn) to keep their finances steady.

Cushman & Wakefield found that the top 43 European banks have €63bn (£52bn) of property assets on their balance sheets (see table).

Matthew Stone, head of occupier strategy at Cushman & Wakefield, said: ‘One increasingly popular method for banks to raise capital is through sale and leasebacks. The Spanish banks, BBVA and Banco Sabadell, and Fortis of Belgium, have all recently announced plans for billions of euros of sale and leaseback transactions, and many other European banks are actively considering them as a cost-efficient method of raising finance.

‘Leading European banks have over €63bn of land and buildings on their balance sheets which, if fully monetised, would meet almost all the €73bn of additional capital needs estimated by Merrill Lynch.’

There are investors willing to buy this kind of property. The fact that some banks have been bailed out by governments provides reassurance that they are safe from insolvency and are good covenants. Sphere: Related Content