National Bank (NBG), Greece’s second-largest lender by assets, said profit from continuing operations had risen in the first quarter of 2019 on the back of higher trading gains.

NBG, 40% owned by the country’s bank rescue fund HFSF, said net profit from continued operations reached €131 million versus a net profit of €8 million in the last quarter of 2018.

Greek banks are focused on reducing their bad debt portfolios and meeting targets on so-called non-performing exposures agreed with regulators.

Trading income rebounded to €101 million in the first quarter from a loss of €47 million in the previous quarter.

«The results of (the) first quarter are beginning to reflect NBG’s significant efforts at transformation,»NBG Chief Executive Paul Mylonas said in a statement.

NBG’s ratio of non-performing exposures (NPEs), which includes non-performing loans (NPLs) and other credit likely to turn bad, edged lower to 38.9% from 40.9% in December. Its provisions for credit impairments rised by 70% quarter-on-quarter to €103 million.

Original Story:Reuters | Lefteris Papadimas 
Photo: National Bank of Greece
Edition:Prime Yield

The reduction of Greece’s banks NPL stock is also leading to shrinking of the credit system’s assets and followed by reduction on the banks staff, according to the online newspaper Ekathimerini.

The total assets of Greece’s four systemic banks reached 225 billion euros in end-2018, 60% of which consisted of loans to businesses and households. This is due to come down by some 50 billion euros, which is the target for the reduction of bad loans by 2023.

The banks’ aim, therefore, is not only to slash their bad-loan stock but also to reduce the staff employed in managing those loans. This effort will also take place at the group level, through the divestment from activities that are not at the core of banks’ purview, as well as by ceasing certain activities abroad.

At its peak in 2008, the number of employees in the Greek banking sector exceeded 66,000. Last year this figure (including non-systemic banks) dropped to 39,380 people, a reduction of 26,780, or over 40%. The number of branches shrank by over 51% in a decade, from 4,097 in 2008 to 1,979 in 2018.

The reduction of staff has been much faster in the last few years than the diminishing of the system’s assets, because banks were slow in relieving their books of nonperforming loans.

The size of the banking system in the next few years will depend on the growth of the Greek economy, but in any case, digital banking is set to change its structure and operation as well.

After a voluntary redundancy program in 2018 that led to 2,582 fewer bank jobs in Greece, estimates for this year speak of a reduction in staff by up to 4,000 people. Banks’ initiatives for the reduction of their employees will not be confined to voluntary exit programs, which are set to see some 1,500 staff depart. Even greater staff cuts are expected – by up to 2,500 people – through the transfer of the management of NPLs to investment entities, with a parallel transfer of employees.

National Bank is due this week to present its transformation plan, a key dimension of which is the reduction of its staff by 2,000 by the end of the year.

Original Story:Ekathimerini | Evgenia Tzortz
Photo: Bank of Greece
Edition:Prime Yield

The managing officers of real estate investment companies as well as foreign funds exploring the Greek market in search of opportunities have their eyes fixed on the real estate assets in the portfolios of secured nonperforming loans that were sold last year.

According to Kathimerini news, preliminary talks for the gradual sale of properties from those portfolios have already started, as the special administrators have made progress in settling a number of pending issues in order to make the transfer feasible.

It is reminded that two portfolios of loans secured on real estate collateral were sold over the course of 2018, for about €770 million. These were the “Amoeba” package by Piraeus Bank, and Alpha Bank’s “Jupiter” package. The cost of the former came to €432 million for buyer Bain Capital, while the latter fetched €337 million from Apollo Global Management.

The real estate assets of the above property packages comprise more than 140 hotel units, worth a total of more than €282 million, which are expected to come into high demand, regardless of whether they are sold off individually or as portfolios.

However, according to property market professionals, there is even greater interest in the way that the properties from the bad-loan packages will be sold.

According to well-informed sources, both Bain Capital and Apollo Global Management are likely to invest directly in a real estate investment company (REIC), in which they plan to bring property assets they have acquired in exchange for a certain number of shares in that company.

In that context, Piraeus Bank’s intention to concede the 39.4% stake it continues to control in Trastor REIC is seen as a springboard for developments in the immediate future. Certain negotiations to that effect have already taken place since the end of the last year, though without any positive conclusions having been reached so far.

Another real estate investment company that is likely to be open to such discussions is Trade Estates, an REIC founded by the Athens-listed Fourlis group whose establishment will have been completed by this fall. The new company has already been endowed with a particularly significant portfolio of properties, all of them of the Fourlis group, with a total value of €176 million.

Nevertheless, the Greek company’s management intends to enrich its asset portfolio further. It is therefore planning to reach out to companies active in the property management sector, and likely with funds too, in order to find co-investors.

The company aspires to evolve into the biggest real estate investment firm in the country in terms of commercial property concentration.

A good illustration of the significant demand being seen from institutional investors, such as real estate investment companies, as well as foreign funds, is the fact that some €300 million have been placed in the acquisition of income properties, such as office blocks and commercial stores, in the first quarter of this year alone.

This amount constitutes a historic high for the sector in a period of just three months, taking into account that as a rule such sums used to be invested in the Greek market over the course of an entire year and certainly not in just a single quarter.

The biggest transaction in terms of value concerned the acquisition of four hypermarket properties of the Sklavenitis supermarket chain by Grivalia Properties REIC. The Athens-listed company carried out the investment, which was worth around €119 million and is set to be officially completed over the next few weeks, before becoming a part of the Eurobank group.

Trastor Properties REIC was also particularly active in the first quarter of this year, as it invested a sum of €46 million, against a total of €38 million over the entire course of 2018. This amount went to the buyout of a series of office buildings, and of a store on Voukourestiou Street in the upscale downtown Athens district of Kolonaki.

Trastor’s biggest transaction this year concerns the portfolio acquired by Argentinian group Grupo Dolphin SA in Greece a few year ago. The portfolio in question, whose final price came to €27.8 million, contains four commercial properties in the Attica area.

Besides this transaction, Trastor has also obtained an office complex that had previously belonged to Prometheus Gas of the Copelouzos group and is located at Paradeisos in Maroussi, north of the capital. The cost of that transaction came to an estimated €12 million.

Likewise, Brook Lane Capital is in the process of completing investments that are expected to reach up to about €110 million. The biggest move in this direction has concerned winning a tender by Alpha Bank for the portfolio of five office buildings, mainly consisting of properties that used to belong to the now-defunct Babis Vovos construction company. Brook Lane Capital has paid Alpha the sum of €95 million for this portfolio.

Original Story: Kathimerini | Nikos Roussanoglou 
Photo: Photo by Markellos P. from FreeImages
Edition:Prime Yield

Greece’s National Bank (NBG) plans to securitise €3 billion of non-performing mortgage loans (NPL) by 2022, its chief executive said, as the country’s lenders battle to deal with a legacy of bad debt.

Non-performing exposures (NPE) in the Greek banking sector totalled € 81.8 billion in December, which at 46.7% of their loan books is the euro zone’s highest.

The government and central bank have come up with more radical initiatives involving securitisations as the urgency for Greek banks to slash their soured loans rises.

Presenting the 2019-2022 strategy of the country’s second-largest lender, Chief Executive Paul Mylonas told a news conference that NBG also plans to sell 3 soured loans portfolios within 2019.

NBG said that it aims to reduce its non-performing loan portfolio to around 5% of total loans by 2022, from 41% at the end of 2018.

This target does not take into account the possible inclusion of its soured loans into two different schemes that Athens and the central bank have been working on, Mylonas said.

One plan to solve the problem is an asset protection scheme (APS) that was put together by the finance ministry and the country’s bank rescue fund HFSF, which holds stakes in Greek banks after taking part in three recapitalisations.

It involves special purpose vehicles (SPVs) that would issue bonds with a government guarantee for senior tranches, similar to a model known as GACS which has been tried in Italy.

A second plan proposed by the Bank of Greece is a scheme to have banks transfer NPEs to an SPV, aiming for a single-digit NPE ratio within two to three years.

Banks would transfer a portion of NPEs and deferred tax credits to an SPV that would fund the transfer with securitisations.

Under an EU-approved restructuring plan to divest non-core assets, NBG twice failed to sell a 75% stake in its wholly-owned insurance unit last year.

Mylonas recently said that NBG will start talking to potential investors for the sale of its insurance business soon. «We have an obligation to sell it by 2020,» he said. Asked if there was serious interest in the unit at the moment, Mylonas said “no”.

Original Story: Reuters | Lefteris Papadimas
Photo:Photo by Michalis Famelis / Wikimedia Commons
Edition:Prime Yield

According to many investors, Greece is in the midst of a supercharged recovery after being the euro debt crisis’s poster child and suffering under years of recession and austerity. But many Greeks are not buying the turnaround story…

By many measures Greece has turned a corner: Its stock benchmark has jumped 26% in 2019, set for its best first half in two decades, and trumping European shares’ 8.1%  gain. Last year, the country recorded the strongest economic growth since 2007. Greece’s 10-year bonds yield 3.3%, a fraction of the 37% the country had to pay at the height of the financial crisis.

For all that, many Greeks are still struggling to claw out from under mountains of debt after a decade during which the economy cratered, contracting by more than a quarter. The country’s unemployment rate of 18.5% is still among the highest in the European Union.

Since the start of the financial crisis in 2010, more than 87,500 small and medium-sized businesses have folded, while personal disposable income has shrunk by 14.5%, national statistics show. About 4 million taxpayers, or about 37% of the population, owe the state €104.4 billion in back payments—more than triple the arrears in 2010 of €32.5 billion.

Many Greeks are exhausted and are no longer putting up a fight to preserve their assets. With cases winding their way through Greek courts, which can take years, many people who were once determined to protect their properties, have seen the ceaseless pressure take its toll, said Dimitris Anastasopoulos, a lawyer who handles cases to stop banks from taking over primary residences.

Borrowers feel harassed, with the collection agencies calling them on a daily basis, Anastasopoulos said to Bloomberg.

Repossession of Greek homes, which was unheard of, is becoming more prevalent as banks themselves face pressure to slash bad loans. Bank non-performing exposures stand at €81.8 billion, or almost half of the country’s gross domestic product. They are the biggest drag on the Greek economy.

Faced with an election year, the government of Prime Minister Alexis Tsipras is seeking to help protect primary residences. At the end of March, parliament voted a primary-residence protection framework after a long-drawn dispute with the country’s creditors over the eligibility criteria.

Distressed home owners can apply for help, and if they meet the criteria, banks will restructure the loan with the state subsidizing a part of the installments and the borrower having to repay the rest without any new delays.

The new framework covers bad loans worth around €25 billion, based on data from the Hellenic Bank Association. Of that, the trade body expects about €10 billion—corresponding to around 160,000 debtors—to use the new legislation and eventually some €5 billion may be restructured and turned into performing loans.

If the estimates are right, the new plan will help both borrowers and lenders. Greece’s creditors and the European Central Bank have identified the reduction of bad debt as the country’s top priority.

Looks Ambitious

Greek banks are auctioning off repossessed residences to clean up their balance sheets but so far the main buyers of these properties have been the banks themselves—with few other bidders emerging. In 2018, some 10,000 properties, or about 85% of the ones put on the block, were bought by the banks. Lenders estimate they’ll buy back some 15,000 homes this year.

While the government is diving in to try and help, for some that aid is coming too late.

Original Story: Bloomberg | Antonis Galanopoulos and Sotiris Nikas 
Photo: FreeImages.com/Takis Kolokotronis
Edition:Prime Yield

Buried under a mountain of non-performing loans (NPL), Greece’s four big banks have been able to sell off some €20 billion euros to distress funds to hound debtors, many unable to pay because of repeated pay cuts, tax hikes, slashed pensions and worker firings.

The banks had already gotten €50 billion in a bailout from €326 billion successive governments got in three rescue packages from international lenders and were allowed to start foreclosing on homes.

Greek banks and bad loan servicers together hold some €100 billion worth of NPL and aim to get rid of €30 billion in the next three years. And the funds are expected to buy another €33 billion more.

So far, 17 distress funds have been licensed for operation in Greece, and another five are expected to open soon, the business newspaper Naftemporiki said.

The funds now employ about 2,000 people, many tasked with repeatedly calling people demanding they pay what they owe while the government is holding back payments to people owed money by the state to build up a primary surplus by not paying bills.

Original Story:The Herald Times |  TNH Staff
Photo: FreeImages.com/Jonte Remos
Edition:Prime Yield