Extend and pretend

Her er det vel på sin plass med det gamle ordtaket “om du skylder banken en million, har du et problem. Om du skylder banken en milliard, har banken et problem“.

I flere år har DnB Nor lånefinansiert en stor aksjepost som eies av flere nøkkelansatte i det børsnoterte eiendomsselskapet Faktor Eiendom gjennom selskapet Faktor Invest.

De ansatte betaler nå hverken renter eller avdrag på millionlånet.

[…]

Tidligere i år reddet DnB Nor det børsnoterte eiendomsselskapet Faktor Eiendom fra konkurs.

Eiendomsselskapet skyldte banken én milliard kroner og DnB Nor måtte gjøre om 250 millioner kroner av sitt utestående lån til aksjer. Dermed ble banken største eier i Faktor Eiendom med en eierandel på nær 30,7 prosent.

DnB Nor har kun pant for lånet i aksjene som Faktor Invest eier og som i dag har en verdi på 26,5 millioner kroner.

Oppdatering: Det er selvsagt ikke bare i Norge dette gjelder (mine uthevinger):

Some banks have a special technique for dealing with business borrowers who can’t repay loans coming due: Give them more time, hoping things improve and they can repay later.

Banks call it a wise strategy. Skeptics call it “extend and pretend.”

Banks are applying it, in particular, to commercial real-estate lending, where, during the boom, optimistic borrowers got in over their heads to the tune of tens of billions of dollars.

A big push by banks in recent months to modify such loans—by stretching out maturities or allowing below-market interest rates—has slowed a spike in defaults. It also has helped preserve banks’ capital, by keeping some dicey loans classified as “performing” and thus minimizing the amount of cash banks must set aside in reserves for future losses.

2 Comments
  1. Comment by Arthur Alcock

    This is now slowing down in Australia. Our banks are far more willing to turf out the equity (if there was any left to begin with), call in the debt, and take on management of the asset itself. Notwithstanding the commodity recovery over here has allowed developers/borrowers to grow themselves out of trouble more readily in any case. My observation has been that European banks, expecially the little ones, are far more keen to avoid the “embarrasment” of NPLs and distressed assets on balance sheet, as if this signals some sort of failure as a bank. Hence, I think that distressed debt is going to be a pretty interesting area for investment over the coming year. I think much of Europe needs to quickly get used to far higher levels of discpline in managing capital: governments, corporates and individuals. I don’t envy that outlook much.

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