Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the doValue nine-month 2021 financial results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alberto Goretti, Head of Investor Relations of doValue. Please go ahead, sir.
Thank you. Good morning, ladies and gentlemen. I'm pleased to welcome you all to doValue 9 months 2021 results presentation. I'm here with our CEO, Andrea Mangoni, and our Group CFO and General Manager of Corporate Functions, Manuela Franchi. In the first part of the presentation, Andrea will walk you through the latest development of doValue business activity. In the second part of the presentation, Manuela will give you an overview of the financial performance of doValue. Andrea will then wrap up to illustrate our financial guidance for 2021, and to give you some final remarks. Following the presentation, we will be glad to answer any of your questions. Andrea, over to you.
Thank you, Alberto. Good morning, everyone, and thanks for joining us today. Starting from page three of the presentation. So far this year, we made very good progress in terms of inflows, in particular in terms of mandates from existing customers under our forward flow agreements, but also in terms of mandates from new clients. Including the Project Frontier in Greece, we have totaled EUR 40 billion of additional gross book value in 2021 so far, a record level for doValue. Project Frontier in Greece is a landmark mandate for doValue, as it allow us to start a relationship with National Bank of Greece, the only sizable Greek bank which has not sold its credit servicing activity.
With Project Frontier, doValue becomes the undisputed leading independent servicer in Greece with EUR 32 billion of GBV, and we are now best positioned for future ABS securitization in the country. The financial performance for the first nine months of the year has been strong, reflecting a normalization of the trading conditions across the geographies in which we operate, plus the accretive contribution of the FPS acquisition closed in mid-2020, and fully included in our nine-month results for 2021. Project Mexico demonstrates our ability to offer bespoke solution to strategic clients through pricing, underwriting, and reselling of complex portfolios. We have been able to structure and execute a successful transaction for Eurobank, allowing us to retain a key servicing mandate, while at the same time booking a profit on the sales of the notes.
Following the acquisition of 10% stake in QueroQuitar in May, we are adding today another important element to our M&A strategy with the acquisition of a 15% stake in BidX1, an Irish proptech company specialized in online real estate auctions. The transaction is consistent with our strategy of increasing growth through targeted acquisition of high-growth companies in adjacent sector to our traditional credit servicing activities. Moving to page four. Here we have a summary of the mandates won so far this year. In particular, the forward flow agreements in place with some of our clients continue to contribute to supporting our gross book value to the tune of approximately EUR 1 billion per quarter.
In addition, in 2021 year to date, we have won mandates from new clients for EUR 5.6 billion in total, which including also the EUR 5.7 billion related to the Project Frontier, brings us to a total additional book value of EUR 14 billion secured in 2021 year to date. All in all, we have already exceeded the targets we have set for 2021 until beginning of the year in terms of forward flow, and we are working towards also meeting the target in terms of new mandates. Moving to page five. As anticipated, securing Project Frontier is an important step for doValue. The transaction represents the first securitization of National Bank of Greece, and it was awarded through a very competitive process.
The consortium composed by Bain Capital, Fortress, and ourselves won, not only by submitting a competitive price to NBG, but also leveraging on credibility and operational track record. Project Frontier might represent the first of a series of securitization by National Bank of Greece, which is the only sizable bank in Greece which has not sold its credit servicing operation. NBG still has an NPE ratio close to 13%. On page six, Project Mexico represents for us a successful transaction on a number of fronts. Firstly, we have managed to retain a servicing mandate for a sizable portfolio in a strategic market. Secondly, through our deep knowledge of the portfolio itself, we managed to offer a competitive backstop to Eurobank, and in line with our strategy of being a pure servicer, to resell the portfolio in the market in an auction process, ultimately achieving a net capital gain.
Lastly, the difference in fee structure due to the securitization of the portfolio is compensated by the payment of a contractual indemnity from Eurobank in the fourth quarter of 2021. As a reminder, a similar transaction was structured with UniCredit between the end of 2020 and the beginning of 2021. In the context of the securitization of the EUR 1.6 billion relay portfolio, where doValue also booked a net capital gain. On page seven, here are some more details regarding the acquisition of a 50% stake in BidX1, the leading pan-European proptech company in the online real estate auction segment. Through its own platform, BidX1 takes care of the entire sale process of the property, including the provision of contractual documentations, visits to the property, and the finalization of the purchase following the auction.
The strategic relevance of the acquisition for doValue is the potential to build a more articulated ecosystem of value-added services, supporting our NPL and REO activities and the potential to improve and optimize our business further. All in all, going forward, we plan to allocate some of the cash flow generated by our traditional credit servicing activity to the acquisition of minority or control stakes in high-growth business in adjacent sectors, with the aim of further diversifying our activities and supporting the sustained long-term growth of our business. Moving to page eight, the key message here is that we are very close to a full normalization of the regulatory framework in our relevant markets, both in terms of moratoria and also in terms of the lifting of foreclosure restrictions.
In addition, court activity in Italy is accelerating significantly in 2021 compared to 2020, and it's approaching 2019 levels. Slide nine is on collection. The improved market conditions are also reflected in our collection performance in both Italy and Spain. In line with the figures already disclosed for the first half of 2021, the collection performance in the first 9 months of 2021 sees Italy reducing the distance to 2019, and Spain having already surpassed the pre-COVID levels. When looking at the third quarter collections, both Italy and Spain are ahead compared to 2019 levels. As a reminder, Greece is not included here because of the limited comparability between years in terms of the scope of FPS activity pre and post-acquisition by doValue.
We expect a further normalization of activity in the fourth quarter of 2021. Moving to page 10, we are proud that MSCI has increased our ESG rating from single A to double A, reaching the top end of the financial services industry. We are particularly proud of the fact that ESG ratings recognizes our improved workforce management practices, as well as the enhancement made in order to mitigate cybersecurity risk. All in all, doValue is very focused on ESG and sustainability, and we are in the process of formalizing our sustainability strategy, will be published in 2022. Now, let me hand it over to Manuela for the second part of the presentation.
Thank you, Andrea. Good morning, everyone. Moving to page 12, here you have the summary of the main KPIs for the first nine months of 2021. As anticipated by Andrea, the first nine months displayed strong growth, both on a reported basis and on a pro forma basis, confirming that the post-COVID recovery is well underway and that we are close to normalized trading conditions. The trend is also confirmed when looking at performance of the third quarter of 2021 versus the third quarter of 2020. In particular, gross revenue in the third quarter of 2021 were up 12% versus the third quarter of 2020.
We expect a further acceleration of performance in quarter four of 2021, considering that the typical seasonality of our business will be further compounded by the post-COVID normalization process and the recognition of the Mexico indemnity fee. In particular, it's worth highlighting that indemnity fees have been a recurring element of our activity and have been booked as gross revenue from an accounting point of view. Indemnity fees have accounted on average for EUR 20 million per annum in the 2017-2020 period, and also likely to contribute to the 2021-2022 PNL for similar amounts. As a reminder, indemnity fees are received by doValue from clients when portfolios are sold or securitized in order to compensate doValue for the loss or reduction in fees.
The net present value of the future cash flows of the contract do not change, but there is an upfront which will balance the lower revenue and lower fees going forward. Moving to page 13. The movements in gross book value reflects on the positive side, the mandates won in 2020 and onboarded in 2021, such as the Icon portfolio in Greece, as well as the mandates won and onboarded in 2021, including EUR 2.7 billion of forward flow and EUR 1.9 billion of new mandates won in 2021, and already onboarded as of September 30. In terms of write-off and disposal, the main item here is related to the EUR 3.5 billion Saturn portfolio from Alpha Bank in Cyprus.
As a reminder, Project Saturn was initially announced in October 2019, and it originally entailed the management of EUR 4.3 billion Saturn NPL and REO portfolio, plus future flows generated by Alpha Bank in Cyprus, with no upfront payment and no people onboarding. In the first part of 2021, Alpha Bank decided to sell the NPL portfolio of the Saturn book, accounting for EUR 3.5 billion, because the difference between the 4.3 had already been collected as of this date. The doValue role was transformed into an advisory role in preparation for the disposal of the portfolio, as it commonly happens when banks want to deleverage their balance sheet. We will try to be best positioned with investors to regain the management of the NPL portfolio, which we are anyhow managing until the end of the sale process.
As previously described, the Project Mexico transaction with Eurobank in Greece is neutral from a GBV point of view. Gross book value decreased in the first 9 months of 2021, while we have EUR 10 billion of new mandates that will be onboarded in the next few months, including Project Frontier, which will more than compensate the recent write-offs and disposals. Moving to page 14. Our gross book value remains highly diversified in terms of clients, geography, security, and business type. As previously anticipated, the Sareb contract currently representing 15% of our gross book value expires in July 2022, and represents around EUR 50 million of revenue in 2021, and EUR 20 million of EBITDA.
The RSP process for the Sareb contract has started last summer, and we are participating and keen to be retained as one of the servicers. We believe that Sareb is going to shortlist candidates between November and December 2021, with the final negotiation leading to an appointment in February or March 2022. The time between March and July of next year is going to be used by Sareb and the selected servicers to upgrade the operating model and perform any onboarding procedures required. We understand Sareb is keen to reduce the number of servicers from the current four to two or three servicers. There could be a chance for doValue to increase its slice of the total GBV assigned by Sareb if confirmed as servicer.
Although we are already one of the largest servicer of the Sareb book, managing EUR 24 billion of the total EUR 80 billion-EUR 85 billion. We believe fees are going to be materially reduced by Sareb with a strong skew towards collection fee as opposed to base fee, also in light of the end of Sareb mission in 2027. All of these elements make us quite cautious regarding the likely profitability of the Sareb contracts in its new form.
Few months ago, we had estimated the Sareb contract that today, as I mentioned before, contributes for around EUR 20 million to go towards 7-8 million contribution in 2022. Now based on the latest feedback from Sareb and also taking into account the potential negative impact of some initial setup costs that will be required, we believe that the contribution of Sareb to 2022 EBITDA is likely to be minimal, while there will be an increase in 2023. The new contract is likely to run from 2022 to close to maturity of Sareb's institutional mandate.
In parallel, in recent years, we have complemented our historical core NPL product to our higher margin segment such as REO, UTP and early arrears, which offer more favorable fee levels and structure, especially on UTP and early arrears. This segment, despite representing 21% of our GBV, represents also 30% of our nine months 2021 revenue. In particular, the direct margin attributable to UTP and early arrears is 94%, approximately, 23 basis points higher than traditional NPL business. Only in Q3 2021, we have won EUR 250 million of real estate mandates in Italy, which is on top of the EUR 1 billion already managed in Portugal and Cyprus.
All in all, real estate is an area which we expanded leveraging on Altamira capabilities and fully deploying the Altamira platform outside Spain. In addition, our UTP business in Italy is also growing and currently sitting at more than EUR 800 million of GBV on top of the EUR 8 billion already managed in Greece. Moving to page 15. Gross revenue in the first 9 months of 2021 grew by 57% on a reported basis, or 13% on a pro forma basis, considering the contribution of the FPS acquisition since the beginning of 2020. The growth trend is also confirmed comparing the third quarter of 2021 with the third quarter of 2020, which are comparable from a perimeter point of view, with gross revenue growing by 12%.
In terms of gross revenue breakdown, we confirm that increase of base fee as a percentage of gross revenue versus recent history is in line with the higher base fee of our Spanish, Cypriot and Greek contracts compared to Italy. Collection fees are also growing in absolute and relative terms, reflecting the improved collection performance across all regions. Page 16 shows operating expenses, which in the first nine months of 2021 grew by 25% on a reported basis or by 13% on a pro forma basis. The increase is mainly due to the end of the special condition that characterized 2020, which implied lower bonuses paid to employees and positive contribution by the Italian state through the Cassa Integrazione scheme.
The cost base is now normalized in 2021, with bonuses being paid again and the Cassa Integrazione scheme no longer available. Moving to page 17. Collection performance is improving in all regions, yielding a 30 basis points improvement in collection rates on a consolidated basis in the last three months, and 90 basis points improvement compared to the end of 2020. While the revenue contribution of the three regions is comparable from an absolute point of view, it's quite apparent that the Greek and Cypriot regions contribute very positively to the overall margin marginality of the doValue group. This is a feature which is likely to characterize our business going forward.
As the Italian business fully recovers, Spain will deal with the Sareb renegotiation in 2022, and Greece will tackle an attractive pipeline of potential new mandates in the next few quarters. Moving to page 18. This is just to give an historical perspective on collection rates by countries, demonstrating how the post-COVID recovery is now pretty much achieved across all regions, with current collection rates only 20 basis points away from the ones in December 2019. These levels are likely to be reached in the next few months as the accumulated backlog of activity by the courts is absorbed. Moving to slide 19. Cash flow for the first nine months of 2021, and in particular the third quarter of 2021, is affected by certain one-off items which have impacted the cash flow conversion metrics.
In particular, the favorable payment terms agreed with Eurobank in 2020 at the time of the closing of the FPS acquisition have positively impacted the cash flows of 2021 fees, which were cashed in at the end of 2020. In addition, the cash generation in the third quarter of 2021 was affected by the payment of the EUR 53 million Spanish tax claim and the EUR 5 million share buyback. The leverage levels at 2.6 at the end of September has already reduced to 2.4 in mid-October, and we expect leverage to further reduce towards 2x by year-end.
Moving to page 20, the bond issues completed in July this year, and the full reimbursement of the bank debt facility related to the acquisition of Altamira has greatly improved the profile of our debt structure. Moving from a mix of bullet and amortizing debt profile to an exclusively bullet profile, which is bringing a meaningful benefit in terms of cash flow generation to our business. Our last bond issued in July 2021, and with maturing in 2026, currently trades with a yield to maturity of 3.2%, which gives you a proxy for our current cost of debt. Our average debt maturity is approximately 4.4 years. Now let me hand over to Andrea again for his closing remarks.
Thanks, Manuela. Just to conclude, on page 22, I wanted to give you an indication in terms of where we expect to close the year on the main financial metrics. We estimate that we will close the year with gross revenues in the range of EUR 565 million-EUR 575 million and with a EBITDA ex- NRI in the range of EUR 190 million-EUR 195 million, in line with the current consensus estimates. As already mentioned, we expect the leverage to decrease towards two times leverage by year-end. In terms of dividend, we intend to set the 2021 dividend payable in 2022 in order to provide shareholders with an attractive and sustainable remuneration.
In particular, we believe that we will be in a position to recommend our board of directors to set a 2021 dividend of at least EUR 0.50 per share, which will provide a sustainable basis for a medium-term dividend policy. In terms of medium-term outlook for 2022, we expect performance to be affected by the Sareb renegotiation, with minimal contribution from the Frontier portfolio. Both Sareb and Frontier will have a positive impact from 2023 onwards. When it comes to market activity, we estimate the new NPEs formation to be close to EUR 90 billion in 2022 in the five markets in which we operate, corresponding to new market opportunity for us in the region of EUR 30 billion-EUR 35 billion.
We are currently involved in several processes in our country of reference, some of which of relevant size, including the three opportunities ranking between EUR 3 billion and EUR 6 billion each in the Hellenic region post Frontier, which will hopefully secured in 2022. More details around our mid-term outlook and financial targets will be presented in a dedicated capital market day, which will be held in the second half of January 2022. I think in January we can give you some positive news both in terms of growth and dividend payment. Thank you for your time and attention. We can now start the Q&A section.
Excuse me, this is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Niccolò Binda with Intermonte. Please go ahead.
Good morning, and thank you for the presentation. I have three brief questions. The first one is on your guidance, in particular net debt. I was wondering if you could tell us what kind of assumption in terms of working capital and other assets and liabilities evolution you are embedding in the fourth quarter. The second one is on the operational side, looking at company's figures. I noticed that the EBITDA margin in Spain is still at 20% in the third quarter, while in Italy it surged above 25%. I was wondering if you could provide some update on what kind of expectation you expect in the next quarters.
Finally, on Sareb, if you could repeat your expectation of the contribution for 2022 and awards. Thank you.
Hi, Nicolò. I'll go through your question. On net debt, the drivers of the net working capital are a net working capital change, which will increase from around EUR 144 million in the nine months 2021 by around EUR 15 million-EUR 20 million to year-end. This is in line with the growth of revenue, while we expect on the other assets and liabilities at this stage neutral to no effect.
On the contribution of Sareb, as I mentioned during my presentation, we expect that the EUR 20 million contribution 2020 will be, if the contract is won, pretty, you know, neutral, slightly positive for 2022, and then recovering because the effect of the new fee is balanced by also the costs that are going to be saved for the activation of new operating model that Sareb is requesting to the new services and obviously the migration cost, in case because there will be portfolio shifts, even if you keep the contracts, among the remaining services.
Obviously this one-off effect for 2023 will disappear with a pickup from them from there, although at lower levels of profitability than the historical one.
Just to clarify this point on Sareb. The estimation Manuela just said are on a standalone basis. It means if the size of the contract will be the same size of the contract we have under management right now. The competitive process of Sareb, the aim of Sareb is reduce the number of player from four to three or two. If we will win the Sareb contract, we will probably have a couple of impact. The first one is negative because the reduction in the fee Manuela explained before. The second could be positive because of the increase in the size of the contract.
We put in our current estimation just the first of these two effects, the negative one. I hope we can be back to you in January during our capital market day with some positive update on Sareb, both in terms of short list and in terms of the size of the contract we can in theory win.
The next question is from Andrea Lisi with Equita. Please go ahead.
Hi. Thank you for taking my question. Several questions for you guys.
Sorry. I think we missed a question on the EBITDA margin in Spain. The question is right because the EBITDA margin is still lower than our expectation. We think we will recover in the last Q of the year, reaching our target for 2020.
Can we move on to the next set of questions?
Okay. The next question is from Andrea Lisi with Equita. Please go ahead.
Thank you. First question is on the indemnity from the Project Mexico, if you can quantify the amount of the indemnity, so the magnitude of that, and also the amount of the capital gain utilized from the disposal of the notes related to Project Mexico, and if we should see them also in the fourth quarter and if you consider them as recurring revenues or in some way, not recurring, so not to be included in the recurring EBITDA. Second question is again on Sareb. You at one point talked about EUR 7-8 million contribution.
I missed if this EUR 7 million-EUR 8 million contribution were related to the possible contribution after 2022, so starting from 2023 onwards or are related to something else. If you can elaborate a bit more on that. Still on Spain, I would like to understand better the correlation that there exists between the collection activity and the EBITDA, because I see that collection activity has surpassed the pre-COVID levels, but the EBITDA does not. If you can elaborate on that and on what are you observing there.
Last question is, if I know that you said that you will be providing new guidance on in your Capital Markets Day, but if at the current environment, given what you're observing in the market, you are able to provide some early indication on 2022, assuming everything remains the same. For example, assuming that Sareb will expire in June 2022 as it is today, with no news. Thank you.
Good morning, Andrea. On the income of Mexico as well as the remaining income of the year, we confirm the contribution, which is similar to the contribution the same category has had in the last three years, between 17 and 20, which was around EUR 20 million per annum. Because as you have seen, not only we shifted Mexico, but we also have other disposals that are traditional in this business that have been occurring this year. For example, disposal of a portfolio from Intesa, the usual UniCredit disposals and the likes. In terms of capital gain on the notes, we are at around EUR 3 million, which is pretty much similar also to the Relay transaction, which was around EUR 4 million.
This is also a very good result for our business because we are diversifying even more on the underwriting space with internalizing all the capabilities that usually are executed by consultants and advisory firms that help banks to sell portfolios to our clients. Now we do all of these internally with our specialized people who do the underwriting, the pitching, the contract negotiation and the structuring of this transaction without any external support. In terms of recurring versus not recurring, the indemnity being this not exceptional compared to the past, will be part of the revenue.
We thought it's helpful to highlight which has been the contribution also historically, because it's important to understand and to explain in a more clear way than probably we have done in the past, that every time you receive an indemnity, you either are losing the portfolio because it's sold to a third party, or if you are maintaining it, you are maintaining at lower fees because you are basically the activity of the portfolio remains the same, but you are upfronting a piece of the revenue with the indemnity, which offsets the difference in the fees from the current status, which is fees, typical fees of a bank client, and bank clients have been paid to get this contract to market fees for securitization which are not paid.
In the Mexico case, we have the benefit of also retaining, and plus receiving, the indemnity. On the Sareb contribution, the EUR 7-8 million wanted to match the guidance that we gave in the past of saying that Sareb, in theory, with the renegotiation at levels which were in line with the 2019 contract of Haya, were going to bring the contribution from the original EUR 20 million to around EUR 7-8 million.
It's not the level at which we would settle for in the steady state for 2023, given that probably the fees are going to be a touch lower than the EBITDA of than the fees of the original Haya contract because of the competitive dynamic without an increase, as Andrea said on the GBP side. We expect something a bit lower than the EUR 7-8 million. The 7-8 was to explain the previous indication. On the collection of the Spanish contract versus EBITDA, it's also there, you might remember that in the past there have been portfolio sold also in Spain.
The level at which the new fee scheme also with portfolio retained are contributed is at lower levels, at a securitization level rather than banking, especially when fund owner is selling. That is why you see similar collection or vis-à-vis 2019, but lower contribution to profitability. On the overall guidance for 2022, I leave it to Andrea to comment.
The main question mark for 2022 is Sareb, both the impact of the new fee on our PNL and, as I said before, the hypothetical positive impact of the new sides of the contract. Leaving aside Sareb, we are positive on 2022, both in terms of growth and in terms of dividend policy. I really prefer to postpone this answer, a more detailed answer to January in our capital market day.
Thank you very much.
The next question is from Andreas Markou with Berenberg. Please go ahead.
Hi, everyone. Thanks very much for the presentation and for taking my questions. Two of them. The first one is basically on what you mentioned on the profitability in Spain. Basically lower fees going forward for the new contracts you're getting. Is it fair to assume that the margins in Spain will basically remain much lower compared to what they were pre-COVID, not only because of Sareb, but also because of the lower fees on the new contracts? My understanding is that this is the case with Italy as well. If we think historically, you are doing margins of higher than 30%, both in Spain and Italy. Basically going forward, a more normalized margin for both regions could be something closer to 25% or like high 20s.
That's the first one. The second one is, I respect your previous answer saying that basically you're gonna give us a bit more detail about the FY 2022 guidance in January. If I may dig a bit deeper here. My understanding is that you are kind of expecting more or less flat EBITDA year-on-year versus 2021, which is about 10% cut to consensus. If I think about the cut consensus, you know, my view is that this is driven partly by Sareb, also by the lower fees you're getting because of the Mexico transaction, and maybe also by the third reason what I mentioned earlier, basically lower profitability going forward in Spain and Italy versus pre-COVID situation.
Can you maybe comment on this and maybe also just give us a few preliminary thoughts on EBITDA growth for 2023 and 2024? Do you still expect to show some growth at the group level at the EBITDA level in 2023 and 2024? Thank you.
Andreas, on the Spain fees, yeah, the any time there is a switch from a bank book to a securitization book, there is always a different fee set. As you know, they are the first one is basically the NPV of the price paid, reflecting higher than fee market levels. For example, in Italy, when we have shifted from EUR 40 billion in 2016-17 of UniCredit book, which had a certain set of fees, to today, which is less than EUR 5 billion of UniCredit book, all the shift has been done towards securitization structure, which are different.
Now, if we compare the fees for the same type of counterparty, so banks vis-à-vis banks, securitization vis-à-vis securitization, and investors vis-à-vis investors, we have a positive trend actually. We will show in the Capital Markets Day how this has moved for each of these categories, based on base fee and collection fee, over the last since 2017. Because the market, due to the consolidation effect and to the flight to quality effect, so focusing on better quality services, especially from COVID afterwards, had you know, an improvement on the fee structure. Structurally lower. But the effect is more recent. In the Italian case, it's a bit different because the Italian shift towards new contracts has started earlier.
We have started earlier also the process of decreasing the cost base. This has been partially compensated and this effect with increasing collection of next year and going forward, we see an improvement in profitability from this level to the target level. We have also mentioned that in the medium term we see the target level to approach the 40% level, and we confirm that amount. On the guidance, after, as Andrea has indicated, we prefer to give more details in the Capital Markets Day, but we see a growth after 2022 of the EBITDA based on the level of 2020, 2021, 2022.
Because of the shift in mix to more profitable products, the relevant contribution from Greece and the higher and the work that has been done and will continue to be done on the cost base to become more flexible, but to reach a break-even point which is lower than the current. You can appreciate that this has already happened in the last couple of years. In terms of your reference to consensus, we must say that you know, in the past we gave guidance on the 2021 consensus.
The 2022 for many analysts did not include also our indication of the lower profitability on Sareb moving from the historical to the 4% contribution that we mentioned. That is the primary reason for some of the discrepancy between the 2022 consensus you have mentioned and the new indication. Just to give you an example, the EUR 20 million historical Sareb levels versus the guidance, the past guidance of EUR 7 million-EUR 8 million is already, you know, EUR 12 million difference that was not captured by some analysts.
Sorry, just to confirm we're all on the same page on Sareb. The EUR 20 million is Sareb for 2021 or 2020? That's the first one. Then,
No.
Yes.
21.
21. Okay. Yes. The negotiation starts in July 2022. Effectively until July you would still be getting the same fee structure. You know, roughly it's actually 5 months next year plus the cost impact. You know, for 2022 the impact of Sareb is EUR 10 million, let's say EUR 12 million, you know, given that you have the operational cost. If I look at consensus, this was at EUR 216 million for 2022. This obviously did not include Frontier. Roughly if we include Frontier, that's EUR 220 million. Going down from EUR 220 million to EUR 193 million, which is consensus EBITDA for this year, that's EUR 27 million impact. If we say that Sareb next year is EUR 12 million, that's less than half of the impact.
Can you explain what is wrong in my calculations or if I'm missing anything?
The consensus was EUR 215 million, and the guidance is in line with this year, which is EUR 195 million. The difference is EUR 20 million. Now, we said that the Sareb was EUR 20 million last year, and the old guidance was EUR 7 million-EUR 8 million, which we'll have for the full year, which included obviously the timing of the ending of the contract. A difference of EUR 12 million, which we are now saying the EUR 7 million-EUR 8 million could be reduced slightly because of the fee negotiation dynamic. Plus you have the onboarding cost, which are only for 2022 on Sareb specifically. On the Frontier point. Frontier, we gave an indication that it's contributing around EUR 5 million per annum.
It's going to be on page 5 of the deck. You have the onboarding cost of 2022, plus you have the onboarding only in the middle of the first half. You have half of this amount for 2022, offset partially by the onboarding cost. This should explain to you the EUR 20 million difference.
Okay. Thank you very much.
The next question is a follow-up from Andrea Lisi with Equita. Please go ahead.
Thank you. Just a follow-up. Looking at the slide of Project Frontier. In one point there is written that you can retain a certain upside on the mezzanine notes. If you can elaborate a bit more on that and which potentially be the extent of this upside.
Yeah, the structure of the notes give us an additional kicker, which sometimes we tend to have with investor clients. We have also in some of the securitization in Italy. This is a faster upside that the investor provides when there is a performance above the business, the underwriting business plan. If this is achieved on top of your collection, the usual collection fee, you have additional fee paid. The NPV of those is around EUR 5 million-EUR 6 million in the medium term.
Okay, thank you. Sorry, just really last follow-up is on the average fee in the new Project Mexico. How much do you expect to lose on a recurring basis in terms of revenues from that?
If you think about the fact that Mexico is EUR 3.2 billion book, and the fees in the market in Greece are above 20 basis points of base fee. Here we are talking about half of these fees. Still above, you know, the Spanish levels and Italian levels, but in line with the others, say, you know, after securitization in the Greek market.
Thank you.
Once again, if you wish to register for a question, please press star and one on your telephone. The next question is a follow-up from Andreas Markou with Berenberg. Please go ahead.
Hi, everyone. One more from me on M&A. You mentioned last time about some platforms in Italy and Spain, currently on the market. Is it still on your agenda that we might see some large scale M&A of you guys consolidating the Italian and/or the Spanish market potentially sometime towards the end of the next year, when also your balance sheet position would be at an even better shape?
Yeah. The M&A market is open in these countries, but we want to achieve a level of stability and both in terms of market conditions and in terms of leverage, which is coherent with the targets we have indicated. Always making a very thorough analysis between the risk and reward of any acquisition vis-à-vis distribution of dividends to shareholders, which is a key question that we always ask ourselves. We think that Spain is a market where we need to wait for the dynamics of Sareb, because Sareb will really create a divide between servicers who are going to keep the contracts and not.
Because despite the lower profitability, strategically it's the relevance in terms of size of the people, you know, working on this contract, the infrastructure and investment make you a much more relevant player or in the market vis-à-vis others, which are going to weaken eventually, and will have a knock-on effect on the players not winning it in terms of eventually losing also other mandates. To approach a consolidation in this moment when these things are not clear gives you not enough visibility on the first year award, but also on the price at which you should settle any transaction that need to take into account what are the remaining contracts that the servicers will be left with beyond Sareb itself.
This is a key question. I wouldn't you know underestimate the transition we are doing also to other revenue contributors that are building growth in our story. You have seen that if we only stayed with a pure NPL servicing the profitability gain we are getting with the new products would not be there. Today with 30% of revenue coming from non-NPL products and with this growing percentage build out also of the other investments we are making this is will be a relevant factor you know after from 2022 onwards.
BidX1 is quite strategic investment in the sense that it's a platform which not only operates on NPL assets but also on performing assets. It operates not only in the countries where we are present but also outside these countries and from an IT perspective and it goes through all the chain of the sale of assets. It's very close to what we do what we need on our assets to even further enhance the sale, the commercialization of you know our of the REO we manage in all the countries now.
Because we are active with our platform in the REO platform in all the countries. They are very present, you know, in Cyprus, for example, where the REO activity is proficient. They are very active with also our competitors in Spain, where the REO business is extremely critical. They are deploying their capabilities in Italy. Coupled with our now deployed platform in the Italian market, this could be a very successful instrument. Notwithstanding the independent growth with other clients and in other segments, which is the performing real estate asset sale, which have their own growth trajectory on their own. Andrea might want to add anything on the strategic aspect.
Yeah. Andreas. On the consolidation process on Spain, as Manuela said before, the M&A market is completely frozen because of the Sareb bidding process. It will probably accelerate after the conclusion of the bidding process itself because the process will literally reshape the market. On Italy, I think the situation is completely different from a year ago because as Manuela said before in the Italian market, we are experiencing a strong flight to quality effect.
Just to give you an example, this year we won, I think, four out of six transactions in the market. Most importantly, we won this more or less 75% of the GBV without any reduction in the fees we offer to the originator. The flight to quality is important, and I think the pressure on the margin came to an end. We are positive on a standalone basis in terms of profitability because these couple of factors, flight to quality and stable or even higher fees.
I think this dynamic will have an effect on the consolidation process because some of our competitors are at risk in terms to be put out of the market.
Okay. Thank you very much. That's very clear.
The next question is a follow-up from Andrea Lisi with Equita. Please go ahead.
Sorry, last one. About the pipeline you see, you said EUR 13 billion-EUR 15 billion. Is that for the next year, right, or for following years? Thank you.
This is 2022, Andrea. In the analysis of the market done by third parties estimated the total addressable market of EUR 90 billion next year in terms of new NP production. Obviously, of this new NP production, we are cleaning that number out of flows that go naturally to the exclusive services of the first and best. We are taking out securitization which are going to the services who already manage that book. We are just mentioning in the EUR 30-35 billion what we see as potential new opportunity on which the competitors and us are working on.
I referenced also you know three active projects in southern in the Hellenic region of size of EUR 3 billion-EUR 6 billion coming from the increase after Frontier likely to add Frontier 2, PQH in Cyprus, Hellenic Bank, the Saturn portfolio coming to market, Bank of Cyprus process. You know it's these markets have now already you know under discussion. It's not prospective trades but are trades in the market already very very active pipeline.
Thank you.