NPL&REO News

Foreign investment in real estate reaches a new all-time high

Capital inflows from abroad for real estate investment in Greece reached a new all-time high in 2019, coming to €1.45 billion and soaring 29.4% from 2018, when the figure amounted to €1.128 billion, according to latest figures from Bank of Greece.

Consequently, based on the data of the payments balance for last year, the real estate sector accounted for 35% of foreign direct investment in the Greek economy that added up to €4.2 billion.

Real estate purchases in Greece by foreigners have been on the rise in recent years, growing more than sixfold compared to 2016, when the amount invested in property by foreigners had come to just €22.4 million.

Even so, there was a slight slowdown recorded in the last quarter of 2019, which may have been coincidental. In the October-December period there was an annual decline of 9.6% from the same quarter of 2018, when an all-time quarterly high of €464.1 million had been registered.

Property market professionals argue that a certain fatigue was to be expected, and this is mainly due to the wait-and-see stance adopted by interested investors ahead of measures to boost the market such as the suspension of value-added tax on new buildings.

Original story: Ekathimerini | Nikos Roussanoglou
Photo: Photo by Toomas Järvet for FreeImages.com
Edition: Prime Yield 

EC warns out Greece on NPLs

Greece passed the test of the fifth post-bailout assessment on Wednesday as the European Comission hailed the country’s progress on reforms and its fiscal position, although concerns remain on the nonperforming loans front.

The Commission’s post-program surveillance report said that Greece’s fiscal and economic prospects have improved and the country is once again projected to exceed the primary budget surplus target of 3.5% of gross domestic product. However, it notes that the planned easing of policy this year (on the solidarity levy, the Single Property Tax – ENFIA and social security contributions) may put off the gradual reduction of the corporate tax to 20%.

In a statement to Ekathimerini, Commission Vice President Valdis Dombrovskis said Greece has generally achieved good progress in fulfilling its reform pledges. However, he did express concern regarding bad loans: «Greece continues to have by far the biggest ratio of NPL in the EU,» he said, adding that Brussels supports the Hercules asset protection scheme aimed at reducing the stock of NPLs, but «it is important to avert the creation of new NPLs.» To achieve that, he noted, Greece needs the appropriate legal framework on bankruptcy and on imposing the terms of loan contracts.

The Latvian official stressed that there is still a problem with strategic defaulters that has to be tackled, and that the very high rate of bad loans is preventing banks from issuing credit to the real economy.

Original story: Ekathimerini | Yannis Palaiologos
Photo: Photo by Jonte Remos for FreeImages.com
Edition: Prime Yield  

Eurobank applies to join Hercules bad loan reduction scheme

Eurobank has applied to take part in Greece’s Hercules bad loan reduction scheme via a €7.5 billion securitisation, the country’s third-largest bank said.

Banks in Greece have been working to reduce a pile of about €75 billion in bad loans, a legacy of a financial crisis that shrank the country’s economy by a quarter. Shedding the bad debt is crucial for their ability to lend and shore up profits.

The Hercules asset protection scheme (HAPS) was put in place to help the banks offload up to €30 billion of bad loans.

Similar to Italy’s GACS model, the scheme was created to help lenders to clean up balance sheets and offload bad debt by turning the bundles of bad loans into asset-backed securities that can be sold to investors.

Eurobank said it had submitted two applications to the country’s finance ministry to “opt-in” to Hercules with two securitisations dubbed Cairo I and II.

«The applications relate to the provision of guarantee by the Greek State on senior notes amounting to €1.655 billion in total,» the bank said. An application for Cairo III will follow in the coming weeks, it said.

Overall, Cairo consists of three securitisations of different size and different types of loan claims.

Eurobank aims to reduce its ratio of non-performing exposures to 15% in the first quarter.

Original Story: Reuters | George Georgiopoulos  
Photo: Eurobank Site
Edition: Prime Yield

Bank’ deposit inflows drop slightly in November

Greece’s private sector bank deposits fell slightly in November after a rise in the previous month, according to central bank latest data.

Businesses and household deposits dropped to €139.57 bn from €139.69 bn in October, Bank of Greece data showed.

Greek banks have seen deposit inflows over the space of more than two years after the country clinched a third bailout to stay in the euro zone in July 2015.

Athens exited its latest bailout in August 2018 and is relying on bond markets to refinance its debt.

Greece fully lifted remaining capital controls on Sept.1 as the economy continues to recover after the tumult of three international bailouts since 2010. 

Original Story: Ekathimerini | Reuters 
Photo: Photo by Pierre Amerlynck /FreeImages.com
Edition: Prime Yield

Greek banks shrank their bad loans pile by more than €15Bn in a year

By end-September Greece’s four systemic banks had reduced their bad loans by more than €15 Bn compared to the same time last year, trimming their nonperforming (NPL) credit to €74 Bn on a group level from €89.6 Bn at end-September 2018.

This has paved the way for a dynamic fourth quarter, by the end of which some significant sale and securitization transactions will have been agreed.

These include the securitization of Eurobank’s Cairo portfolio worth €7.5Bn and the sale of its FPS loan management offshoot expected by year-end, and the securitization of Alpha’s Galaxy portfolio of €12Bn along with the sale of Cepal in the first half of 2020. In 2020 Piraeus will carry out two transactions totalling €3Bn while the National will securitize loans equal to €3.5Bn.

Original Story: Tornos News |  News 
Photo: Photo by JonteRemos/FreeImages.com
Edition: Prime Yield

Alantra advises Eurobank on the largest Greek public NPL securitization to-date

Greece’s Eurobank has completed its second public NPL (Nonperforming Loans) securitization, Project Cairo. This is the largest Greek NPL securitisation to-date, with a total GBV of €7.5bn is comprised of non-performing multi-asset loans at varying stages of restructuring and enforcement processes. Alantra Credit Portfolio advised the operation, acting as co-arranger and financial lead advisor to the deal.

This is expected to be also the first securitisation that will opt-in for Hellenic Asset Protection Scheme (“Hercules”), the Greek government recently approved HAPS guarantee scheme.

Cairo SPV will issue 3 classes of Notes’ notional amounts as per following: Senior Note €2.4 billion, Mezzanine Note €1.5 billion and Junior Note €3.6 billion. The Cairo transaction’s parameters have accounted for the estimated cost of Hercules and are subject to the targeted rating confirmation.

Eurobank will retain 100% of Senior Notes and will opt-in for the Hercules. Furthermore, it will retain 5% of Mezzanine and Junior Notes to comply with risk retention requirements.

20% of the Mezzanine Securitisation Notes and the minimum required percentage of the Junior Securitisation Notes will be sold to doValue S.p.A., the leading NPL servicer in Italy. The implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes corresponds to 33.3% of the total gross book value of the securitized portfolio.

75% of the Mezzanine Notes and 44.9% of the Junior Notes to be potentially distributed as dividend in kind to shareholders, subject, inter alia, to corporate and regulatory approvals.

The transaction took place in parallel with the disposal of part of FPS to doValue, which – adding FPS to its existing business in Italy and Spain – is set to establish itself as the top loan servicer and REO manager in South Europe. The Bank has recently sold portfolio Pillar to PIMCO, which will be also serviced by FPS along with the remaining €11.3bn performing and non-performing exposures that are still retained by Eurobank.

With this milestone agreement, Eurobank enters the final stages towards completion of its accelerated plan for the clean-up of its balance sheet and becomes the first Greek bank to turn the corner on the major legacy issue of the NPE stock. Together with Pillar, they are the first NPE securitizations in Greece and key components of Eurobank’s frontloaded NPE reduction strategy, which aims to achieve the targeted NPE ratio of below 15%.

«This transaction represents a landmark deal for the Greek Market, the inaugural NPL securitization to opt-in for the new Hercules asset protection scheme. We are proud to have played an instrumental part in it», Vasilis Kosmas, Partner of Alantra, commented.With an NPE pipeline currently sat at over €20bn across the Greek banking sector, Greek HAPS guarantee scheme approved, rising real-estate values, and re-worked borrower protection laws, the market is primed for another active year ahead.

Original Story: Webwire
Photo: Eurobank Site
Edition: Prime Yield  

Alpha Bank determined to turn the page of its NPL problem

Alpha Bank’s management has designed a strategy to reduce its NPL (Nonperforming Loans) problematic stockpile and transform the group so that it can «turn the page,» the lender’s CEO Vassilis Psaltis told Kathimerini, stressing that the Greek economy is on a steady growth path and that the international investment community is regaining faith in the country’s prospects.

In the same interview, Psaltis notes that the time has come to make up for the ground lost during the crisis, explaining that Alpha Bank will be at «forefront of this national effort, securing credit to households and businesses of €14 bn by 2022

A few weeks ago, the bank introduced Galaxy, the largest portfolio of NPLs in Greece to date which is set for securitization in 2020. And, according to the CEO, this plan «reflects Alpha Bank’s commitment to leave the problems of the crisis behind and “become a bank once again,” reasserting its leading role as a financier of households, businesses and the Greek economy».

«This is not just the most significant securitization of nonperforming exposures in Greece, but the third largest in Europe», Psaltis stressed, adding that this transaction will allow Alpha to reduce its NPE rate from 44% in 2019 « to below 20% in 2020 and eventually to a single-digit rate in 2022. The percentage of NPLs in default for more than 90 days will fall below 5% in 2022».

«We are decisively proceeding to a cleanup of our balance sheet in order to devote all our energy to what we are doing really well, which is banking and financing the economy», Alpha’s CEO asserted. However, he reckons that the «we are doing it now, not only because we have the experience and capital strength to aim high, but also because three crucial conditions are now being met: Supervisory authorities are urging similar initiatives, a dramatic improvement in macroeconomic figures has been recorded, one that brings our country to the very center of investment interest, and thirdly, Hercules, the Greek asset protection scheme, has been activated».

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

PQH sells €1bn impaired loans portfolio to Intrum Hellas

PQH, the liquidator for bad banks in Greece, has signed a deal to sell a €1 Bn portfolio of unsecured impaired loans to loan servicer Intrum Hellas. The deal was agreed at a price of €71.1 Mn, meaning PQH will receive 7% of the outstanding principal.

The portfolio comprises unsecured retail and small business soured loans. Morgan Stanley advised PQH on the deal.

Intrum Hellas was created last month as a joint venture of Greek lender Piraeus Bank and Swedish loan servicer Intrum. It is the biggest independent servicer of non-performing loans and real estate assets in the Greek market, managing Piraeus Bank’s €26 Bn of non-performing exposures (NPEs), while Greece’s other 18 licensed credit servicers were handling a total of €17.5 Bn of non-performing loans as of June 2019.

Original Story: Ekathimerini | Author: News 
Photo: Intrum site
Edition: Prime Yield

Value of loans serviced by domestic CSF incread in Q3 2019

The nominal value of loans serviced by domestic Credit Servicing Funds (CSF) increased in the third quarter of 2019, according to Bank of Greece’s official data.

In particular, the total value of loans serviced by CSFs increased by €1,967 Mn euros in the third quarter of 2019 and stood at €20,105 Mn, from €18,138 Mn in the second quarter of 2019.

The nominal value of serviced corporate loans increased to €5,408 Mn in the third quarter of 2019, from €5,367 Mn in the previous quarter. In further detail, the nominal value of loans to non-financial corporations (NFCs) increased by €41 Mn to €5,361 Mn at the end of the third quarter of 2019. Out of the total loans to NFCs, an amount of €3,719 Mn corresponds to loans to small and medium-sized enterprises (SMEs).

The nominal value of loans to insurance corporations and other financial intermediaries, serviced by CSFs, remained unchanged from the previous quarter, at €47 Mn.

The nominal value of loans to sole proprietors and unincorporated partnerships, serviced by the CSFs, decreased by €9 Mn from the previous quarter and stood at €2,256 Mn at the end of the third quarter of 2019.

The nominal value of loans to individuals and private non-profit institutions, serviced by the CSFs, increased by €1,936 Mn to €12,441 Mn at the end of the third quarter of 2019. In further detail, the serviced consumer loans decreased by €9 Mn to €10,105 Mn at the end of the third quarter of 2019, while the corresponding housing loans increased by €1,956 Mn to €2,329 Mn.

Original Story: The National Herald | Ana 
Photo: Bank of Greece
Edition: Prime Yield

National Bank of Greece sells shipping NPL portfolio Worthing €262 Mn

National Bank of Greece has reached an agreement to sell a portfolio of non-performing (NPL) shipping loans with an aggregate face value of €262Mn to investment funds advised by Cross Ocean Partners. 

In a note, the lender explained «the transaction is being implemented in the context of NBG’s NPE reduction strategy». In the same statement is said that the sales price is about 50% of the portfolio’s worth on the balance sheet and would have a «marginal» impact on the bank’s capital.

A source with knowledge of the transaction told Lloyd’s List that the agreed portfolio comprises about a dozen individual loans including some coastal ferry lending, but the majority relate to oceangoimng dry bulk and tanlker business, the source said.

Servicing of the loans is expected to be assigned to QQuant Master Servicer, which is licenced by the Bank of Greece as an independent specialist in servicing of non-performing Greek debt.

Recent research put the bank among the top 10 lenders to the Greek shipping industry.

Cross Ocean Partners, led by ex-Bank of America Merrill Lynch managers Graham Goldsmith and Steve Zander, was set up in 2015 with backing from US-based private equity firm Stone Point Capital. 

Nat West Markets acted as financial advisor on the sale while NBG retained Watson Farley & Williams as legal counsel.

Original Story: Loyds List | Nigel Lowry 
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield

Over 20,000 properties from NPL portfolios should flood the market

Over 20,000 properties of all types are expected to come on the market in the coming years, either through direct sales or auctions, with an obvious impact on prices.

This concerns properties that constitute collateral in nonperforming loan portfolios that have been or will be sold in the coming months to investment funds and groups such as Apollo Global Management, Bain Capital and Centerbridge Partners; some of them have already hit the market.

Bain Capital made its first sales in July and it has already collected €35 million through the sale of significant buildings. The US-based private investment firm acquired the Amoeba NPL portfolio for €430 million, including some 2,300 properties as collateral. At this stage Bain is proceeding with the second phase of property sales to institutional or private investors.

Apollo is also active in the market with its first sales after buying out the Jupiter portfolio for €337 million. This NPL package concerned requirements of €1 billion and is estimated to include over 1,700 properties from mortgages that add up to more than half a billion euros. A large share of those assets (about 40%) concerns residences; another part concerns commercial properties, while there are also dozens of hotel assets.

Sources say that for the time being the process of retrieving the obligations is ongoing, with the majority of borrowers choosing the path of auctions. In this context it is estimated that more than 1,000 properties will go under the hammer in the coming months. The process will likely begin in April or May, with several hundred property auctions scheduled for then.

The other option debtors are offered by the funds concerns sale by consent: In this case the borrower accepts the sale of their property in order to service their debt. A third alternative regards the repayment of the debt following some kind of write-off, which means the debtor retains the collateral – i.e. their home – in their ownership.

Meanwhile property market professionals note the start of the sale process for over 70 properties held by Alpha Bank, that were also transferred to Apollo as part of Project Jupiter. These are assets the bank itself had retrieved and included in the portfolio so that it was more attractive to the buying investor. These assets, with an estimated value of more than €50 million, have already been conceded for sale to major property service companies, and include residential properties, offices and a few hotels. This is not a mass sale, as each property is being sold individually, as was also the case with the assets sold by Bain Capital.

Bain, along with Apollo Global Management and Fortress are also looking to land Project Neptune, which concerns Alpha Bank NPLs with property collateral. This portfolio, with an accounting value of €1.8 billion (the loans belong to 1,10 small and medium-sized enterprises), includes 4,000 properties as collateral valued at approximately €1.1 billion. Some 30% of them are commercial assets (offices and stores), another 20% are industrial properties, while the package also contains hotels, plots of land and logistics facilities.

In the coming weeks the market further expects to see the first few properties from the Symbol portfolio that National Bank recently sold to the consortium of Centerbridge Partners LLP and Elliott Advisors (UK) Limited for €250 million. This portfolio consists of 12,800 NPLs with 8,300 properties as collateral and will be managed by Cepal Hellas.

National will also decide in the coming weeks about the sale of the other loan portfolio with property collateral, Project Icon, which accounts for some 6,000 assets adding up to €1.1 billion. These are mainly commercial properties as well as hotel units and industrial plants. Just over a quarter (27%) are located in Athens and another 23% are in northern Greece.

That portfolio concerns delayed loans totaling €1.52 billion in capital terms, while the total requirements (including interest) of the bank come to €2.52 billion. The package to go up for sale includes 7,300 delayed loans taken out by very small to medium-sized enterprises.

Project Icon is split into two parts: The first concerns the loans of 137 SMEs that owe capital of €959 million, and the second comprises €564 million in loans taken out by small and very small enterprises. The non-binding offers were submitted on October 15, from which Apollo, Centerbridge, Fortress and the Elliott-Bain consortium have been short-listed. According to the timetable, the binding bids will be tabled by mid-December.

Original Story: Ekathimerini | Nikos Roussanglou
Photo: FreeImages.com/Takis Kolokotronis
Edition: Prime Yield

Morgan Stanley foresees Greece’s NPEs to drop by €26 billion in 2020

The state’s asset protection plan, dubbed Hercules, will render securitizations a more attractive instrument for the reduction of nonperforming exposures (NPEs) of Greek banks, according to Morgan Stanley, while Germany’s Scope Ratings notes that securitization conditions in Greece are improving.

In a new report, Morgan Stanley estimates that Hercules will relieve banks of bad loans amounting to €22 billion next year, reducing their average NPE index to 23%, from 36% this year, while the banks themselves will shrink their NPEs by another €4 billion in 2020.

The report projects that Alpha will achieve an NPE index of 18% next year, from 40% in 2019, while Eurobank’s is seen dropping from 16 to 10%, and Piraeus’ from 48 to 42% next year.

According to Morgan Stanley, besides Hercules, there are also macroeconomic, political and legal factors that support the reduction of Greek lenders’ NPEs.

That support is anticipated to come from the government’s commitment to reforms and fiscal streamlining, the recovery of growth, real estate prices that are expected to climb 7-8% per year in the next three years, and new bank-friendly legislation. Consequently, Morgan Stanley projects a reduction of NPEs in the next quarters.

For its hand, Scope Ratings says in a report that the reduction of bad loans through securitizations will constitute a key factor in the support of the weak recovery of the Greek economy, along with strengthening the funding capacity of the credit sector and investments.

«Legal reforms are in place to champion the creation of a domestic nonperforming loan secondary market and reduce the large crisis-induced stock of nonperforming exposures. This, together with a more conducive market environment, has led to better conditions for NPL securitizations, especially those backed by residential mortgages,» stated Jakob Suwalski, associate director of Scope’s public finance team and co-author of the report.

Original Story: Ekathimerini | Eleftheria Kourtal
Photo: Bank of Greece
Edition: Prime Yield

Piraeus partners with Intrum and create the largest NPL servicer in Greece

Piræus Bank, one of Greece’s largest lenders, set up and agreement with Swedish loan servicer Intrum to manage its non-performing assets (NPA), creating thus the biggest independent loan servicer in the Greece market, according to executives from both firms.

Being Greece’s largest lender by assets, this deal with Intrum is part of Piraeus efforts to reduce its risk exposition from bad debt. 

«The deal is the biggest foreign direct investment by a Swedish company in the Greek financial sector, » Christos Megalou, CEO of Piraeus Bank told reporters. «We have created the first independent servicer of size in the Greek market. »

The transaction valued the new loan servicing platform at €410 million with Intrum acquiring 80% of the new company for €328 million. The remaining 20% will be held by Piraeus Bank. The non-performing credit will stay on Piraeus Bank’s balance sheet. 

Intrum Hellas is already up and running, managing Piraeus Bank’s €26 billion of non-performing exposure (NPEs). In comparison, the 18 licensed credit servicers in Greece were servicing a total of €17.5 billion euros of NPL as of June this year. About 1,000 employees of Piraeus have moved to the new company.

The new company hopes to take up the loan servicing of third parties as well. Executives said there was about €10 billion of NPL that have been bought by specialist funds which are looking for independent loan servicers.

Intrum, with a current market value of about €3.5 billion, operates in 24 European countries, employing 10,000 people. It did a similar deal with Italy’s Intesa Sanpaolo in December last year.

«It is our market entry into Greece, we hope to offer our value proposition to other institutions as well. We are here to stay, » said Intrum’s CEO Mikael Ericson. «We seek the right balance between amicable and legal collection. » 

Greek banks have been working to reduce a pile of sour credit, about €75.4 billion at the end of June, the legacy of a financial crisis that shrank the country’s economy by a quarter.


Original Story:
 Reuters | Georgiopoulos
Photo: Piraeus Site
Edition: Prime Yield

Greek Government seeks additional solutions to clean up bad-loans from banks

Greece’s government is seeking out additional systemic solutions for the banks’ bad-loan problem, beyond the state’s Hercules plan, Finance Minister Christos Staikouras revealed. His comments came after Bank of Greece Governor Yannis Stournaras said that Hercules is a step in the right direction but is not enough.

«We are open and already looking for other, realistic, innovative and effective systemic solutions, » besides Hercules, Staikouras said in an interview to Bloomberg, adding that Greece will eventually manage to shrink the nonperforming loans ratio to below 10%.

Stournaras had referred to the need for a more holistic solution that would also tackle the problem of deferred tax assets, reintroducing the BoG proposal that was not submitted for approval to the European Commission.

Bloomberg noted that Greece, which had an NPL rate of 39.2% at the end of June, has the highest ratio in the eurozone. The Hercules project is seen reducing NPLs by €30 euros thanks to the collateral of €9 billion euros it offers.

Staikouras also told Bloomberg that Athens is negotiating with the country’s creditors about the use of eurozone national central banks’ profits from Greek bonds (SMPs and ANFAs) for investment instead of cutting the national debt.

Original Story: Ekathimerini | Eirini Chrysolora
Photo: Photo by Markellos P. from FreeImages
Edition: Prime Yield

EU’s NPL stockpile halved since 2015, but remains hefty in Greece and Cyprus

The stockpile of Nonperforming Loans (NPL) in the European Union has halved since 2015, but, and even though all the progresses, remains hefty at lenders in Greece and Cyprus, according to the latest data released by the bloc’s banking watchdog.

The volume of NPLs across EU banks has fallen from €1.15 trillion in June 2015, when they were 6% of total loans, to €636 billion or 3% by June 2019, according to the European Banking Authority (EBA). It looked at a sample of 150 banks that account for over 80% of the sector’s total assets.

The overall drop was due to regulatory intervention, «political determination» to tackle the problem properly, and the boost from economic growth and low interest rates, EBA said.

While the average level of NPLs for the bloc has halved, some countries remain at a high level as they try to tackle a stubborn legacy of NPL stockpiles.

Greece’s NPL ratio was 39.2% in June this year, with Cyprus at 21.5%. Five other countries were above 5%, Portugal included. In 2015, 10 EU countries reported double digit NPL ratios.

Italy recorded the biggest drop, down €145 billion in over the four years, followed by €81 billion in Spain, €60 billion in Britain, and €43 billion in Germany.

Poor loans now account for nearly 8% of Italian loans, down from nearly 17% in June 2015.

«There are significant ongoing initiatives that aim to further boost the reduction of legacy assets both at European level and in specific countries,» the EBA statement said.

As the economy weakens, banks should closely monitor the quality of assets on their books to actively manage their NPLs, it added. 

Original Story: Reuters | Huw Jones
Photo: FreeImages.com / Jonte Remos
Edition: Prime Yield

doValue manages Alpha Bank’s €4.3 billion NPL portfolio in Cyprus

doValue, Italy’s largest loan recovery servicer, had reached an agreement with Greece’s Alpha Bank to manage a gross €4.3 billion portfolio of Non-Performing Loans (NPL) and Real Estate Assets (REO) in Cyprus.

A company from the spinning off of Italy’s UniCredit’s debt collection unit, doValue would also manage any of Alpha Bank’s future NPL and REO in Cyprus, it said in a statement.

Under the agreement, doValue’s non-performing assets (NPA) under management in Cyprus rise to about €11 billion out of a total of approximately €20 billion in the country, it added.

In August, Greece’s top four banks agreed to have doValue, then called doBank, manage a combined €1.8 billion worth of their NPL.

Original Story: Reuters |Giulio Piovaccari
Photo: Site AlphaBank
Edition: Prime Yield

EU gives the green light to Athens’ scheme to clean up NPL’s from banks sheets

The European Union (EU) has approved a Greek government scheme designed to help its banks rid themselves of toxic debts, after ruling that it does not breach rules barring its member states from providing unfair financial assistance. 

Greece’s scheme, named after the mythical hero Hercules, will allow the government to guarantee a slice of bad debts that banks sell on to specialist investors. The measure aims to boost efforts to clean up Greece’s still-fragile financial sector, with more than 40% of Greek banks’ overall loans considered “non-performing” (NPL) after a deep financial crisis.

In a statement to Financial Times, George Zavvos, Greece’s deputy finance minister told this plan would enable the country’s banks to remove up to €30bn of non-performing loans from their balance sheets.

As for Margrethe Vestager, the European Commission’s competition chief, said that the proposed guarantee would not constitute state aid, describing it as a market solution to «tackle the stock of NPL weighing on the balance sheets of Greek banks». According to the EC’s responsible, this scheme « is another good example of how member states can help banks clean up their balance sheets without granting aid or distorting competition,».

When the EU created a framework for dealing with stricken financial institutions and beefed up its state aid rules in 2014, it made it harder for its member states to directly take on their banking sector’s bad debts, as Spain was previously able to do in the depths of the financial crisis. 

The Greek solution is modelled closely on a guarantee used in Italy to underpin multibillion-euro bad debt deals from the likes of Monte dei Paschi di Siena, the world’s oldest bank. 

In these securitisation deals, a bank transfers some of its bad debts into a financing vehicle that then sells different slices of risk to fund managers or other specialist buyers. As debt collectors recover money from consumers and businesses that have fallen behind on their payments, the proceeds flow to these investors, with the safest piece getting repaid first and the riskiest last. 

Several Greek non-performing loan securitisation deals have already taken place after reforms in 2017 allowed institutions other than banks to collect bad debts. Pimco, the $1.8tn US asset manager, invested in a €2 billion deal backed by Greek mortgages from Eurobank this year, for example. 

But the new scheme would make the top-ranking slices of these deals even safer, by backing them with a guarantee that the Greek government will step in if they are not covered by the underlying loan repayments. This would make such securitisations even more attractive to investors. 

In Italy, the government-guaranteed slices of these securitisations were often held by the banks themselves on their balance sheet and used as collateral to raise further financing. The riskier pieces of these deals in Italy were often sold to US hedge funds or an Italian bank rescue vehicle called Atlante, which was also carefully constructed to comply with EU state aid rules. 

The Greek finance ministry said its plan would help banks «clean up their balance sheets more quickly and return to their proper role of financing the real economy». 

«It will be the first securitisation of NPL in a country that lacks an investment-grade debt rating» the ministry said. 

Greece is ranked several notches below investment grade by international rating agencies and is not expected to be upgraded to investment status before mid-2020, an adviser to the government said. 

Mr Zavvos said a law permitting the securitisation would be approved by parliament next month. Investor appetite for the securitisation, especially the tranche backed by the state guarantee, «should be strong since this issue will carry a positive interest rate at a time when we are seeing bond yields moving deeper into negative territory», said an Athens-based fund manager.

Original Story: Financial Times | Robert Smith / Karin Hope 
Photo: Photo by Toomas Järvet for FreeImages
Edition: Prime Yield

Piraeus Bank rewards borrowers with home loans who pay on time

Piraeus Bank, Greece’s largest lender by assets, announced the launching of a reward programme for borrowers with home loans who service their debt regularly and have no arrears.

The move is an attempt to embed a culture of paying on time in a country where many borrowers struggled to service their debts during the country’s economic crisis.

Saddled with € 80 billion of non-performing loans (NPL), Greek banks have been shedding non-core assets and shrinking branch networks to reduce the pile.

The NPL ratio of Greece’s four major banks, including mortgages, remained the highest in the European Union at the end of 2018 – more than 12 times bigger than the EU average of about 3.2%.

Piraeus said it would start returning cash to borrowers, equivalent to a 0.10% reduction of the interest rate on their home loans, in January every year. The benefit will be a lump sum for payments made during the previous year.

Under the programme, Piraeus will also offer home repair loans at preferential low rates of one-month Euribor plus a spread of 1.5%.

The reward programme will apply to borrowers who took out mortgages up to the end of 2014, the bank said.

Original Story: Euronews | Reuters/ George Georgiopoulos 
Photo: Piraeus Bank
Edition: Prime Yield

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

 

Hipoges reinforces in Greece with the acquisition of Alsvit

HipoGes strengthened its presence on the Greek market by acquiring Alsvit, having completed a majority shareholding agreement with that management services provider. The expansion into Greece started two years ago.

During this period, HipoGes has incorporated professionals in key positions to manage its Greek subsidiary. Currently it collaborates with one of the country’s leading financial entities on a debt recovery project and  it’s involved in several processes of NPL portfolios.

Alsvit is a REO Management Services company with over 12 years of experience in the Greek market, working with the country’s leading financial institutions and investors, providing a wide range of REO services, from asset valuation and pre-acquisition support, to sale preparation and execution. Alsvit is also active in construction, and has built and refurbished commercial and residential buildings, including a large number of branches for Greek banks.

«With this partnership, HipoGes guarantees professional and quality REO services in the Greek market and, at the same time, it incorporates knowledge and expertise in a new market where great development is expected, says the company in a press release.

Original Story: Hipoges | Author: PR 
Photo: HipoGes Site
Edition: Prime Yield

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