Alpha Bank works on NPL securization plan

Following the steps of Eurobank, Alpha Bank is also working on a plan for the securitization of its non-performing loans (NPL) and their management by an independent company to which the lender’s competent staff will be transferred.

Named «Galaxy», this plan provides for the securitization of NPL’s worth over € 10 billion and the concession of their management to a company that will also absorb some 700 staff from Alpha, according to Kathimerini.

This is the so-called «carve-out» model based on splitting an activity from a company to form a new entity, which has been applied in countries such as Spain and Italy where banks had similar NPL problems. In the last 12 months this model has been adopted in Greece by Eurobank, while Piraeus has opted for a similar version.

Alpha will soon be putting this option to its board for approval so that it can launch procedures to find an investor. Viewed as the fastest and most efficient way for Alpha to tackle its bad-loan problem, this solution is also seen reducing costs for the bank via the transfer of staff to the new entity.

The same sources say that the solution proposed is closer to Eurobank’s model, i.e. the securitization of loans, so that they can be removed from the bank’s books and Alpha’s financial accounts can be streamlined.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Photo: Alpha Bank Site
Edition: Prime Yield