Europe’s Top Banks Feed Debt Takeover Growth at Hoist of Sweden

(Bloomberg) -- A Swedish firm that makes money by restructuring the debt of Europe’s biggest banks plans to move into more countries across the region as lenders increasingly offload their bad loans to meet stricter capital requirements.

Hoist Finance AB could enter “a handful” of new markets in 2017, Chief Executive Officer Jorgen Olsson said in an interview in Stockholm on Dec. 16. The Stockholm-based company currently operates in 10 countries in Europe.

The expansion will come “as we grow with our existing partner banks in other countries,” Olsson said in an interview in Stockholm on Dec. 16.

HSBC, Barclays

While Hoist doesn’t plan to move outside Europe next year, the firm will probably enter other continents “within a few years” via existing clients, Olsson said. Banco Santander SA is big in South America, while HSBC Holdings Plc has large operations in Asia and Barclays Plc operates in markets such as South Africa, Olsson said.

Hoist buys portfolios of non-performing unsecured consumer loans and credits to smaller companies from banks that are eager to reduce their risk-weighted assets to meet stricter capital rules. It then generates a profit by managing those portfolios and collecting the money owed.

The company, which conducts its operations without using credit-default swaps and is supervised by Sweden’s financial regulator, counts Europe’s 10 biggest banks among its clients.

Most recently, Hoist has targeted Spain. It entered that market in June after purchasing a portfolio of non-performing claims originated by four regional Spanish banks. In September, Hoist acquired Madrid-based servicing company Optimus. Olsson says Hoist may do more infrastructure acquisitions in Spain and that it has plans to expand in the country.

“We must increase our internal capacity as we grow,” he said.

Acquisition Plans

While the Hoist CEO declined to give a forecast for the volume of portfolio acquisitions in 2017 and beyond, he said the company “isn’t protesting against” the average estimate by analysts. Hoist will make portfolio acquisitions of 3.76 billion kronor ($401 million) next year and 3.92 billion kronor in 2018, according to the average estimate of five analysts published on its website. That would imply annual revenue growth of some 10-15 percent in the coming years, Olsson said.

The fourth quarter has developed “according to expectations,” Olsson said, reiterating his statement from the third quarter of “achieving acquisition volumes in line with the past three years.”

To contact the reporters on this story: Hanna Hoikkala in Stockholm at hhoikkala@bloomberg.net, Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net.

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Celeste Perri at cperri@bloomberg.net, Niklas Magnusson