Pichincha, an Ecuador based Bank with offices in Madrid, have bought the Spanish mortgage book which was originally owned by GMAC.
GMAC held a book of both resident and non-resident mortgages granted over a three year period both from their own direct distribution arm and also via Bankinter and latterly Banesto.
The direct arm sold the book to Fortress, an investment company from USA, and the indirect book of Bankinter was sold to investment firm AG Sarl based in Luxembourg. The book was sold at a large discount. Fortress have now sold this on.
Experience has shown to date that the value of the securities held against the mortgage are often lower than the debt held, this is despite GMAC only ever offering 60%. Being self certified meant, particularly on their resident book, that they were lending to individuals without provable incomes. Those borrowers with temporary jobs, migrant workers, and cash-in-hand workers were the first to go.
The book, whilst possibly sub-prime, is not a non-performing book and one assumes that Pichincha have only bought performing loans. It is therefore strange that there should be an investigation back in Ecuador because it is rumored they have bought a book of non performing loans.
The decision to buy and get a footing in the Spanish Market without having the history of issues existing Banks here have may well prove in the long term to be a masterstroke, but clearly the Ecuadorian government are yet to be convinced .
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