A massive electrical outage swept through Spain and regions of Portugal and France yesterday, leaving millions without access to electricity, mobile, and internet services. 

While most areas regained power late on Monday night, the blackout laid bare the vulnerability of payments systems.

Many banks in Spain halted access to point-of-sale terminals, leaving shops and restaurants without ways to accept card or online payments from customers. The European Central Bank (ECB) extended its delivery versus payments deadline by an hour in a rare move, almost certainly prompted by the outage, as banks’ central securities depositories struggled to reconcile payments made during the day. 

The blackout, which affected Spain as well as the Basque regions of France and much of Portugal, including Lisbon and Porto, was due to an electrical failure in Spain’s power grid, which in turn affected the connections with its neighbors; overall, an estimated 50 million people were affected. 

The cause of the blackout is believed to be a “rare atmospheric event” that caused extreme temperature variations in Spain, leading to an imbalance in the frequency of the national power grid that had knock-on effects on all surrounding regions. Extreme temperature variations, an effect of climate change and global warming, are expected to sweep through most of Europe this week, with the UK experiencing temperatures as high as 27°C in some areas. 

The outage has had little if any economic impact, as critical infrastructure like hospitals stayed mostly unaffected and many businesses stayed open. The Spanish stock exchange remained functioning throughout the outage, opening this morning with a slight gain. However, the widespread, immediate halt in online payments highlighted the fragility of the international payments system and its reliance on underlying infrastructure. 

Spain’s central bank said that by 15:30 local time – four hours after the beginning of the blackout – its national and cross-border payments system was back to normal. However, bank branches, merchants, and individual businesses experienced problems throughout the day as card readers ran out of batteries and ATMs remained inactive. The ECB postponed the start of the delivery versus payment cut-off by an hour.

Spain is one of the most cash-dependent countries in Europe, despite efforts by the governments to encourage more uptake of online and card payments to decrease corruption. If the blackout had occurred elsewhere, the effect may have been even more pronounced, grinding national economies to a halt: the UK, for example, only has 6% of payments made in cash, compared to Spain’s 57%.

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Businesses and public authorities across the EU may be facing tougher laws on late payments, with the European Commission proposing a new regulation enforcing maximum 30-day terms.

The proposal, part of a comprehensive set of policies designed to underpin the resilience of SMEs across the EU, is set to revise and replace the 2011 Late Payment Directive with a more stringent EU Regulation. The implications of this proposal have spurred discussions and raised several concerns within the supply chain community.

At the ITFA Christmas event in London, TFG’s Deepesh Patel sat down with Silja Calac, a Board Member at the International Trade and Forfaiting Association (ITFA), to discuss the key novelties of the Late Payment Regulation proposal compared to the existing Late Payment Directive, its potential impact on businesses, especially SMEs, and the recommendations put forth by ITFA to navigate these proposed changes successfully.

The 2011 Late Payment Directive: The need for change

On 12 September, 2023, the European Commission unveiled a proposal for a new EU Regulation aimed at tackling the issue of late payments in commercial transactions in Europe. A fundamental feature of the European Commission’s proposal is to replace the current 2011 Late Payment Directive with a Regulation applicable to all EU Member States once enforced.

Currently, the existing directive stipulates a payment term of 30 days for B2B transactions. However, this can be extended to 60 days or more “if not grossly unfair to the creditor”.

In practice, the absence of a maximum payment term and the ambiguity in the definition of “grossly unfair” has led to a situation in which payment terms of 120 days or more are not uncommon.

The new proposal takes a decisive standpoint, striving to establish a uniform 30-day payment term applicable for all commercial transactions, including B2B, large companies and SMEs while protecting businesses from the adverse effects of payment delays in commercial transactions. It is not yet clear how far this will apply to public authorities though.

The proposed regulation sets forth a comprehensive set of objectives, aiming to combat late payments, rectify imbalances in contractual bargaining power, facilitate timely payments, and fortify redress systems. With a pronounced emphasis on protecting SMEs, the regulation seeks to establish a clear, standardised payment term applicable to all European businesses.

As Calac said, “The current Directive in place leaves much room for interpretation. The European Commission wants to establish a very clear and strict payment rule for all businesses.”

Pending approval by the European Parliament and the EU Council of Ministers, the proposed legislation entails automatic penalties for late payments, accruing interest at 8% above the European Central Bank (ECB) base rates. Notably, these laws encompass every commercial or business organisation and are specifically designed to expedite payments for the EU’s SMEs.

Other provisions include the removal of the right for contracting parties to extend payment terms, a restriction on the creditor’s ability to waive late payment interest, and an obligation on debtors to pay late payment interest on overdue invoices. This comprehensive overhaul reflects the European Commission’s commitment to creating a more efficient and equitable payment landscape, particularly benefiting SMEs.

Diving into everyday business challenges: ITFA’s perspective

While the proposal presents at first glance some commendable measures, such as reducing maximum payment terms for SMEs and reinforcing the enforcement by compulsory interest payments, closer examination reveals that the wider impact of the proposed Regulation requires careful consideration.

Despite the regulation’s intention to support SMEs, ITFA advocates against a rigid, one-size-fits-all model. For instance, Calac referenced a potential challenge for buying SMEs, which often operate on tight margins, in complying with the mandated payment term.

Strict timelines, while aimed at promoting financial discipline, may inadvertently burden SMEs as buyers/debtors, constraining their ability to manage cash flow effectively and allocate resources efficiently.

She said, “This will backfire when SMEs act as the buyer. For them, they will need to seek additional funding resulting in higher financing costs, particularly since it will not be based on the rating of their better-rated buyer.”

Moreover, limiting businesses’ ability to freely negotiate extended payment terms tailored to their unique circumstances is highly likely to disproportionately affect industries with complex supply chains and lengthy capital cycles, particularly impacting SMEs.

Such a stringent approach overlooks the diverse nature of industries, distinct business models, and variable financial capabilities of SMEs. Consequently, it unintentionally infringes upon the right to freedom of contract, restraining negotiations that might better serve the parties involved.

As Calac emphasised, “This is not ideal in a free economy. The German Association of Lawyers (Deutscher Richterbund has already expressed its concern as this regulation would be against liberal economic principles and the freedom of contracting. It is also what ITFA fears can be the detriment of SMEs.”

Besides, the proposed 30-day limit of payment terms could be detrimental to the competitiveness of EU suppliers and buyers engaged in transactions outside the EU.

International settings commonly involve longer payment terms, and constraining these terms could result in a competitive disadvantage for EU-based companies. Although the freedom of contract would be maintained in B2B transactions outside the EU, EU-based companies operating internationally might be compelled to require shorter payment terms, diminishing their attractiveness compared to their non-EU counterparts.

The Commission’s proposal for the Late Payment Regulation recognises an opportunity to enhance competitiveness through improved payment discipline which can undoubtedly provide valuable support to SMEs.

However, the present proposal brings along unintended consequences that could jeopardise the very businesses it seeks to protect. Therefore, a nuanced approach is essential, one that achieves a delicate balance, safeguarding SMEs while acknowledging and addressing the specific complexities of different situations rather than applying a one-size-fits-all solution.

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One year after an EU court ruling on beneficial ownership registers left civil society and journalists in 13 countries encountering obstacles or completely unable to access information regarding companies’ real owners, Transparency International (TI) has published analysis of how different European states have responded by introducing disparate approaches to beneficial ownership access.

The need for a harmonised approach across the EU is clear, according to the NGO that focuses on combating global corruption. 

Background

General access to beneficial ownership registers that had been guaranteed across the union by the 5^th EU Anti-Money Laundering Directive (AMLD5) is now curtailed in many member states since the November 2022 decision of the Court of Justice of the European Union. 

The decision annulled provisions of the AMLD5 that required public access to beneficial ownership information as means to prevent and detect money laundering and predicate offences.

Harmonised system needed

While an EU-wide rule is pending, certain member states have already taken measures to regulate legitimate interest. 

But TI’s analysis reveals that the approaches taken are diverse, highlighting the necessity for a harmonised system across the EU.

Restrictive approaches

Ireland, for example, has implemented a highly restrictive approach. Those wishing to access information must demonstrate engagement in the prevention, detection, or investigation of money laundering or terrorist financing offences. 

The company subject to the access request meanwhile should also be connected with persons convicted – whether in Ireland or elsewhere – of an offence involving money laundering or terrorist financing, or hold assets in a high-risk third country. 

Italy has annulled provisions that determined that beneficial ownership information should be available to the public upon request and without restrictions while in Germany and most other states that have introduced new access regulations, registry authorities are analysing legitimate interest access on a case-by-case basis.

Degrees of openness

Only Luxembourg and Spain allow general as opposed to case-by-case access. Luxembourg has instituted informal agreements with local journalists, while access remains restricted for foreign journalists and civil society. 

Spain has the most comprehensive response so far according to TI. Under a new July 2023 decree, media and civil society organisations that work on issues related to the prevention and fight against money laundering and terrorism financing are presumed to have a legitimate interest and can access the Spanish beneficial ownership register. 

TI’s analysis, EU court ruling on beneficial ownership registers: one year on, need for harmonised approach is clear, can be found here.

This article was sourced from https://atfcp.com/ and was republished with their permission.

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The eurozone witnessed a return to growth during the second quarter of 2023, recording an expansion that surpassed expectations, having just about dodged a technical recession at the year’s commencement, according to initial data released on Monday.

Gross domestic product in the eurozone saw a 0.3% upswing in the second quarter, surpassing the forecasted 0.2% in a Reuters survey of economists. When compared to the same period in the preceding year, growth tallied at 0.6%, in contrast to anticipated growth of 0.5%.

In comparison, the 20-nation eurozone reported zero growth in the prior quarter and a 0.1% quarter-on-quarter decrease during the final quarter of 2022.

Among the largest nations within the bloc, France and Spain demonstrated sustained growth rates, bolstered by robust exports and a flourishing tourism sector. Conversely, Germany, the euro zone’s largest economy, posted no growth, and Italy experienced a contraction.

Inflationary pressures, due to escalated energy costs in the wake of Russia’s Ukraine invasion and soaring food prices, in addition to elevated interest rates and dwindling confidence, have left their mark on the single currency’s economy.

Yet, the economy has shown signs of robustness as well, much akin to the COVID-19 pandemic period, during which growth exceeded expectations as businesses adapted to the altered circumstances more swiftly than policymakers had anticipated.

Nevertheless, even with the bloc performing above expectations, growth in 2023 is likely to be subdued due to a substantial decrease in real incomes coupled with surging interest rates.

The European Central Bank has suggested the possibility of halting its interest rate increases in September, as inflationary pressures begin to show early signs of easing and concerns of a recession intensify.

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Chief executive of gas grid operator Enagas, Arturo Gonzalo Aizpiri told reporters on Thursday that the European Union funds could finance 30% – 50% of the underwater hydrogen pipeline to be laid between Spain and France.

Spain and France have agreed to explore the possibility of building a pipeline to ship green hydrogen between Barcelona and Marseille at a cost of about €2.1 billion, Gonzalo said, while a connection between Spain and Portugal would cost around €350 million.

The funding would come from that set aside by the EU for key cross-border energy infrastructure designated as “Projects of Common Interest”.

Gonzalo said the remaining 50% – 70% of the cost would be covered by the countries which would benefit from the project, the pipeline’s future customers and fees charged to ship the gas.

“It will have no cost for Spanish consumers,” he added.

Enagas’s top executive said the countries involved, including Germany which expressed interest last month, were “advancing in the technical definition” of the project, which is being evaluated to see if it meets the EU’s funding requirements.

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The world of trade is changing. Increasingly, the topic of environmental responsibility is taking centre stage, with discourse specifically circling around how the finance industry can implement sustainability measures more effectively. 

At Sibos 2022, Trade Finance Global’s (TFG) Annie Kovacevic spoke with Sven Schmidt (SvS), regional head of trade finance operations in Europe and Americas at Commerzbank––a trade financier for the German Mittelstand (medium-sized companies). 

Sven is also a Steer Co-member of the Working Group on Sustainable Trade Finance at the International Chamber of Commerce (ICC). 

What does sustainability mean to you, Commerzbank, and the banking sector? 

SvS: The sector as a whole is taking action. The International Chamber of Commerce (ICC) has published its sustainable trade finance framework, which will foster and incentivise sustainable trade globally. 

Commerzbank supports the ICC’s work by participating in various working groups and joining the minimum viable product (MVP) to test the framework starting in November this year. 

Commerzbank has also issued its own Environment, Social, Governance (ESG) framework,  delineating what we consider to be sustainable and how we apply ESG principles to our business. 

The framework clearly states all the key cornerstones of our sustainability strategy, making our sustainability concept transparent to all stakeholders. 

In particular, it governs which products are considered sustainable. Amongst others, it describes the criteria for sustainable lending and the reduction targets for CO2-intensive sectors. Social criteria are also taken into account, and the criteria for exclusions are defined. 

Sustainability metrics are now key performance indicators for our company, accelerating our sustainable transformation. 

We have a very holistic approach to ESG. In practice, this means not only looking at individual transactions but rather looking at the whole supply chain––our clients and our client’s clients––to see if they fulfil certain minimum standards. 

For example, under the MVP now launched by the ICC, for a client in the textile industry, we will check whether they comply with the ICC’s and ITC’s approved standards regarding the production of goods, fair wages, no child labour, and so on. 

How much has the conversation around ESG changed in the last few years? 

SvS: The client conversations have become much more frequent and intensive. 

When we started client conversations two years ago, I would say about 90% of our clients were interested and excited about ESG as a new topic to begin exploring. Increasingly, clients now want solutions and proposals regarding what we, as a bank, can do to assist them and manage their transactions. 

In many companies, this desire for change has reached the C-suite level, which is very important because that is where the momentum to really drive change comes from. 

Our role has shifted too––from offering an interest-based exploratory capacity to being an active participant in clients’ transformation journey. 

In terms of standards and interoperability, how do you think the industry can come together and collaborate and overcome hesitancy to share data?

SvS: Among a variety of industry initiatives, the ICC also has an important role to play as a promoter of standardisation and a catalyst for change. 

It is the organisation that sets many of the standards, for example, the Uniform Customs and Practice for Documentary Credit (UCP 600), which is the framework banks refer to for letter of credit transactions. 

What the sector needs now is to accelerate its efforts––that’s why I really like that we are going out with an initial MVP now rather than waiting until we have covered every sector and every eventuality. 

This, of course, necessitates extensive collaboration between banks, corporates, and technology providers at every step of the way. 

How will having standards, frameworks, and scoring systems incentivise traders to take the first step towards more sustainable trade? 

SvS: It’s a very good first step to showcase that certifications and standards matter. It’s important for everyone in the ecosystem to be involved––from the smallest buyers and suppliers all the way up to the massive corporates and their banks. 

Standardisation would ultimately pull everyone in the industry towards more sustainable practices. Market players will quickly see that if they don’t take ESG seriously, they will be left out of the market and have trouble selling their goods or providing their services. 

What does the ideal world look like to you in terms of sustainability and trade helping to reach the  UN’s Sustainable Development Goals (SDGs)? 

SvS: In an ideal world, trade would serve as an accelerator, promoting and ultimately helping businesses reach the SDGs. This is not just a vision of the future, though; it is becoming a reality today. 

I’m a big fan of making use of technology, and that’s why I really appreciate that the ICC also has a technology working group. 

I’m optimistic that the solutions it develops will be workable. At Commerzbank, we are also developing a technological solution that will make clear strides towards sustainability to create awareness and start reducing carbon emissions in trade finance.

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Fears continue to grow over a potential global food security crisis as European farmers struggle to save their crops from extreme weather events.  

As much of Europe bakes in the latest heatwave, fears are growing about what’s being dubbed ‘heatflation’ – climate change-driven staple crop losses that could see already inflated food prices reach new highs this autumn, deepening the cost-of-living crisis. 

A lack of spring rainfall, combined with drought and freak storms, have spoiled crops in Italy, France, and Spain, with many farmers and agricultural associations warning that this year’s continental crop yields will be significantly smaller than usual.

Already, continental yields of crops such as soybean, sunflower, and maize were 9% below average, according to an EU bulletin published last month. 

Italy declares a state of emergency 

In Italy, water shortages and drought have led to a drop of as much as 45% in corn and animal feed yields, and a 30% reduction in wheat and rice production, according to the farmers’ union, Coldiretti.

The drought has also affected the country’s fruit and milk production, which is down between 15% and 20% as a result of heat stress, leading the Italian government to declare a state of emergency in five regions this July. 

According to President Mario Draghi, a lack of rainfall, together with rising temperatures, has severely affected two of Italy’s main rivers, the Po and the Tiber, which have virtually dried up, leading to the worst drought the country has faced in 70 years. 

The Po River and surrounding drainage basins are particularly significant for the Italian agricultural industry since more than half the country’s national pork and beef livestock are reared here. 

The Italian agricultural sector has also been affected by a rise in production costs resulting from the conflict in Ukraine, which has created fertilizer shortages, a situation compounded by poor infrastructure management, leading to water leakages of around 30%.

France also hit hard 

Meanwhile, in France, a combination of unusual summer heat levels, together with freak hailstorms, strong winds and torrential rain, have affected fruit, cereal, and wine production in departments across the country.

In a statement released in June, the National Farmers’ Union Federation (FNSEA) reported that “the damage is very significant, with some farms seeing 100% of their crop affected.”

France is currently Europe’s third-largest wheat exporter after Russia and Ukraine, and after the driest July on record, it is expected that this year’s crop yield will be down significantly from last year’s. 

France’s corn harvest is also expected to be 18.5% lower than 2021’s, according to figures released by the French agricultural ministry.

French dairy farmers are also warning of a coming milk shortage this winter due to animal fodder shortages and parched grazing areas – a situation not helped by a ban on irrigation in large parts of the country due to water restrictions. In some places, levels are so low that drinking water is having to be brought in by truck. 

Meteo France, the national weather agency, claimed that this was the country’s worst drought since records began in 1958.

Mediterranean water levels low

Mediterranean countries on the Iberian peninsula are reporting similar issues, with Spain experiencing high temperatures and worsening water shortages that have been affecting its agricultural industry since late 2021.

Spain’s olive oil sector, which is responsible for supplying almost half of the world’s total olive oil exports, has been especially affected – the COAG farmers’ union told AFP that Spain’s olive harvest is expected to be a quarter of the average produced in the last five years. 

In Portugal, the worst drought this century has led to low dam levels, limiting the country’s ability to generate renewable energy in places. 

Their capacity to generate hydroelectric energy has been half that of the average generated over the previous seven years, while Spain’s reservoirs are operating at just 40.4% capacity.

Climate scientists have revealed that large portions of Europe are now at risk of dangerously high drought levels – classified as “warning” (44% of EU and UK) and “alert” (9% of EU and UK).

Scientists point to climate change 

Analysis of weather data by experts at the European Commission (EC) suggests that much of the problem has arisen from lower than usual winter-spring precipitation levels (19% of the 1991-2020 average) leaving little soil moisture content for young plants to draw upon during their early growth stages, a situation exacerbated by summer heatwaves. 

This has led to widespread stress on vegetation. 

Many point to climate change as the main driver behind this worrying phenomenon, a situation worsened by ongoing trade disruptions resulting from the conflict in Ukraine and problems in China, where the agricultural industry has also been affected by heatwaves.

Climate change expert, Elizabeth Robinson, director of the London School of Economics’ research unit on the environment, said that escalating food costs – which are likely to be worsened by ‘heatflation’ ‒ were a sign that “food systems aren’t working for people.”

“There are some long-term, difficult conversations that need to be had, particularly about food waste and the diversion of grains away from food for people to feed animals,” she told reporters at a recent news conference.

Biodiversity: the way forward

According to food NGO, Crop Trust:

“Just three crops – wheat, maize and rice – make up nearly half of the world’s food supply. All are vulnerable to extreme weather conditions like drought and heat. 

“Without some help, many of our most beloved foods will not be able to withstand climate change, which is already leading to crop failures, rising food prices, and surges in hunger and malnutrition worldwide.”

Executive director, Stefan Schmitz, insisted that part of the solution to the problem of climate change-induced food shortages was greater biodiversity and a move away from monoculture.

By diversifying and trying to develop newer, hardier crop and livestock varieties like cassava, pearl millet, and goats that could better withstand things like heat, pests, and disease, the charity argues that farmers and plant breeders could “remain productive in the face of a changing climate and with fewer inputs.

“We can’t do this without crop diversity,” Schmitz told Food Ingredients First magazine in July. 

“The diversity between and within crops underpins the sustainability of the world’s food supply.”

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Specifically, the European Commission (EC) is now considering the creation of European Union (EU) strategic gas reserves.

Similar to the US strategic petroleum reserve, the creation of EU strategic gas reserves would reduce volatility in wholesale energy markets, as it would reduce the EU’s reliance on imports. 

Extreme price volatility has been evident across European energy markets over the last few months. Contracts in the UK, for instance, have been losing over 100p/th on any given day.

The National Balancing Point (NBP) Jan-21 gas contract settled at c.432p/th on 22 December and lost over 100p/th in value on 23 December. 

Such price volatility has prompted policymakers to intervene, in an effort to protect residential customers, businesses, and suppliers.

The European Commission believes that building strategic gas reserves is a better solution for long-term price stability, rather than relying on solutions such as bailing out suppliers, providing state subsidies, or negotiating long-term contracts with Russia.

Government-controlled gas reserves

For much of Europe, low storage inventories in 2021 have led to an over-reliance on imports from Norway and Russia.

Statements made by Russian President Vladmir Putin, and auction activity by Gazprom, has led to extreme volatility in the European and UK market.

In order to avoid such volatility going forward, the establishment of government-controlled strategic reserves of gas held in storage beyond existing commercially-owned inventories could play a crucial role in protecting European gas prices from future price spikes. 

Several EU countries currently do have some regulation in the storage sector that requires minimum stocking levels, including France and Italy, but there is no centralised policy.

The European Commission for Energy has previously shown some support for the idea of European strategic gas reserves, as this would provide the bloc with stable and predictable supplies. 

Kadri Simson, the current commissioner for energy at the European Commission, has pondered the idea of EU strategic gas reserves since the beginning of 2021, and there is a strong possibility that a decision with regards to its approval could be made in the first half of 2022. 

The joint procurement organised by Brussels to purchase COVID-19 vaccines for all EU countries has reinforced the idea that joint procurement of EU strategic gas reserves is a viable solution, ensuring the European market remains well supplied. 

A long-term solution

The creation and procurement of gas and storage sites for government-controlled strategic gas reserves is a solution for the long term. 

The creation of storage sites, according to European members of parliament, could take up to three years. 

And with wholesale energy costs at record highs for 2022 and 2023, in the interim the European Commission has proposed introducing minimum gas stocking levels for Winter 2022. 

By legislation, the European gas market will be required to be a certain level ahead of the start of the winter contract. 

There are a number of points that need to be considered by policymakers before the EU strategic gas reserve is approved.

Firstly, when policymakers consider gas storage, would gas be stored in underground storage sites via injection, or in floating storage and regasification units? 

In terms of price economics, which would be the least inexpensive and with the net zero carbon targets in place, how much are European governments willing to invest in these infrastructures?

Secondly, the creation of strategic reserves will impact current hub markets. How current prices react to this news needs to be considered before any policy is approved.

Lastly, storage capacity in the EU is unevenly distributed with large facilities In Italy, France, Germany, and Netherlands.

However, geological restraints mean that only small gas capacities can be stored in east and southeast Europe to allow for continuous gas supplies. 

For EU gas strategic reserves to work efficiently, storage sites need to be spread across Europe and new interconnectors need to be built, with the purpose that all member states can benefit from stored gas.

What’s next?

Currently, there is no consensus amongst European policymakers on how a joint gas purchase system or how the European strategic gas reserve will work in principle. 

However, policymakers remain committed to ensuring a system is in place to strengthen the EU’s gas storage policies. 

There is a strong possibility that Kadri Simson will approve a joint procurement strategy for EU member states in the first half of 2022, and by means of legislation, there will also be a requirement of a minimum gas storage levels for member states heading into Winter 2022.

The post Safe keeping: The promise of government-controlled European strategic gas reserves appeared first on Trade Finance Global.

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The post TFG Weekly Trade Briefing, 9th August 2021 appeared first on Trade Finance Global.

ING has announced today that it has underwritten the refinancing of Montepino, the leading logistics assets developer and asset manager in Spain and Portugal, which was recently acquired by the new alternative investment vehicle of Bankinter Investment (owned by Valfondo, Montepino’s founding partner and manager, Bankinter, and its private banking and institutional clients).

The refinancing transaction, which represents the largest underwriting carried out by a bank in the Spanish logistics sector and one of the largest in Europe, has enabled optimal acquisition financing conditions by Bankinter Investment vehicle as well as to support the current projects under construction. Amounting to €470 million, the loan has a maturity of 5 years. As sole bookrunner, ING has now commenced the loan syndication process.

“We are very proud of being able to finance this interesting and highly complex real estate acquisition. Our client focus and our sector expertise has enabled us to support both Bankinter and Montepino throughout the process, with ING acting as the sole bookrunner for the deal,” says Julián Bravo, Head of Real Estate at ING Spain & Portugal.

On May 14^th, Bankinter Investment, the Investment Banking division of Bankinter, announced the acquisition of the 95% stake of Montepino from CBRE Global Investors through a company created by Bankinter, together with Montepino’s managing partner, Valfondo. The REIT arisen from this deal will have Bankinter and Valfondo as shareholders, with 6.4% and 5.1% respectively, in addition to the bank’s private banking and institutional clients. It will be the largest logistics assets REIT in Spain.

Montepino’s portfolio comprises of 22 operational logistics assets, with a gross area of 865,000 square meters and 13 projects under development that are expected to exceed 1.2 million square meters in the coming years, with a gross asset value of €1.2bn. Montepino is one of the largest logistics developers in Spain and among the top ten in Europe. Montepino’s assets, with an average age of not more than two years, combine Big Box or XXL and last mile logistics platforms and are built in strategic locations for logistics.

Leadership in real estate financing with a focus on sustainable assets

ING has a solid track record in the real estate finance market in Spain and Portugal. During the last 5 years, it has been one of the most active banks with annual volumes close to €1bn. During the last 18 months, and despite the sector’s uncertainty due to the current market environment, ING has closed 10 deals with a volume of more than €800 million of new financing. A significant part of that is accounted for by the logistics sector, an area in which ING has been particularly active since 2014, and where it has seen potential due to the growth in ecommerce.

At the end of 2020, more than 60% of ING’s real estate financing portfolio in Iberia can be considered sustainable. It was the first bank to grant a sustainable improvement loan to a leading company in the real estate sector in Spain.

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