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Goldman Sachs Might Buy ING's Italian Real Estate Portfolio

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Goldman Sachs Might Buy ING's Italian Real Estate Portfolio

Goldman Sachs (GS) shows operational efficiency by undertaking growth strategies with support from its strong capital position.

The Goldman Sachs Group GS is likely to ink a deal with ING Groep N.V. ING to purchase the latter’s Italian real estate leasing portfolio, per an article by Reuters.

The deal is expected to be finalized in December 2018 and close in the first quarter of next year. The concerned portfolio contains performing and non-performing real estate leasing contracts.

Per the letter seen by Reuters, ING said, “The long maturity of real estate leasing contracts ... means their financial risk is particularly high and makes it difficult to take actions to lower it, creating uncertainty over future results at ING Bank NV.”

In November 2017, Goldman had bought an Italian performing lease portfolio worth €483 million after the changes in Italian laws that made it possible to transfer lease contracts as part of securitization deals.

Also, in September 2018, the Wall Street giant’s investment management subsidiary purchased government debt from Turkey and Argentina as it finds these markets capable of offering more profitable bond trades in 2018.

Portfolio Divestures of Other Foreign Banks

ING undertook the divesture with an aim to cut exposure to leasing activities outside domestic market. On similar lines, Deutsche Bank DB and Banco Bilbao Vizcaya Argentaria, S.A. BBVA had previously divested their loan portfolios.

In September 2018, Deutsche divested its energy loans portfolio worth nearly $3 billion to Bank of Montreal that includes investment-grade and subprime revolving credit lines to oil and gas companies. In June 2018, it had offloaded distressed shipping loan portfolio, which has a notional value of $1 billion, to Oak Hill Advisors and Varde investors. The bank aimed to re-enter the transport lending business after discarding these bad loans.

In June 2018, Banco Bilbao Vizcaya Argentaria agreed to sell its €1 billion ($1.16 billion) property loan portfolio to the Canada Pension Plan Investment Board, which invests the assets of the Canada Pension Plan.

Our Take

Goldman’s strong investment banking operations help keep its overall performance solid. Further, the company’s efforts to tap new growth opportunities through several strategic investments, including the digital consumer lending platform, will likely support its overall business growth.

Shares of Goldman have lost 7.4% over the past six months compared with 13.9% decline witnessed by the industry it belongs to.

 

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Deutsche Bank Aktiengesellschaft (DB) : Free Stock Analysis Report
 
Banco Bilbao Viscaya Argentaria S.A. (BBVA) : Free Stock Analysis Report
 
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
 
ING Group, N.V. (ING) : Free Stock Analysis Report
 
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