Greece gets €3.5bn windfall from selling state stakes in big banks

The sale of state stakes in five banks by the end of the year is expected to raise €3.5 bn for Greece, Finance Minister Kostis Hatzidakis told a parliamentary committee.

He said the New Democracy government was focused on “saving Greek deposits as well as Greek businesses and households from a wider collapse and crisis”, even as debt collectors hound those who can’t pay their loans.

Many defaulted during a 2010-18 economic crisis in which Greece received €326 bn in three international bailouts to stave off collapse, with banks receiving €50 bn in rescue packages to stay afloat.

The sale comes after the recovery of the investment grade, the high growth rates and the positive course of most of the main parameters of the economy,” he said, referring to Greece being upgraded to the highest level by most agencies and attracting foreign investors.

Bank of Greece Governor Yannis Stournaras said the sales, together with other proceeds from the Hellenic Financial Stability Fund (HFSF), would total about €53.7 bn.

Earlier, Finance Minister Kostis Hatzidakis told Reuters that “we’ve had very strong interest from many investors and that’s why we’re aiming to complete this process by the end of this year” as Greece recovers.

The state recently sold its stake in three major banks, raising more than €2 bn, with the latest sale of a 27% stake in Piraeus Bank oversubscribed eight times as investors jockeyed for position.

Under an agreement with creditors, Greece has until the end of 2025 to complete the sales, but has decided to move faster. The remaining 18.4% stake in National Bank, the country’s largest lender, and 72% in smaller Attica Bank will be sold this year.

“We found there was no reason to delay, to drag our feet,” said Hatzidakis, as banks have seen deposits return and made big profits after selling off bad loans to debt collectors who hound people to pay back debts even when they can’t.

Original Story: The National Herald
Edition: Prime Yield


Spanish mortgage delinquencies rise to 2.6% by end-2023

Mortgage delinquency in Spain has risen to 2.6% at the end of 2023, with an increase of 0.3% compared to the end of 2022, according to data from the Spanish Mortgage Association (AHE) collected by the Bank of Spain.

The Spanish Mortgage Association (AHE) has revealed that delinquencies on loans granted for house purchases reached 2.6% at the end of 2023, compared with 2.3% at the end of 2022, according to data from the Bank of Spain. This increase has added around 900 million euros in doubtful mortgage assets over the year.

Despite this increase, the AHE points out that this rate of doubtful assets is at levels comparable to those observed at the beginning of the financial crisis in 2008, and far from the peak of 6% reached in 2014. The association explains that mortgage lending has historically had one of the lowest default rates due to the “sentimental implications” associated with home ownership.

In contrast, the NPL ratio for real estate activities has shown a slight improvement, standing at 3.0% at the end of 2023. The EHA points out that non-performing loans in this sector currently account for around 10% of non-performing loans in the corporate sector, a significant decrease from the crisis levels of 2011 and 2012.

By 2024, the EHA forecasts that mortgage delinquencies could experience upward adjustments, but the possible reduction in interest rates by the European Central Bank (ECB) could provide relief to households and companies in Spain. The association stresses that this reduction would benefit a large proportion of borrowers, especially those with mortgages that are subject to six-monthly reviews.

In summary, although the improvement in credit quality depends not only on the evolution of interest rates but also on the general health of the economy, mortgage delinquencies are expected to improve next year thanks to possible monetary measures by the ECB.

Original Story: Estrategias de Inversion
Edition and Translation: Prime Yield

NPL pile

Banco Montepio and BPI to sell 200 million in NPL

Banco Montepio and BPI are in the market to sell non-performing loan portfolios with a book value of more than €200 million, according to information gathered by ECO from market sources.

Banco Montepio’s so-called “Zêzere Project”, with a book value of €120 million and launched last week by KPMG, includes two tranches of non-performing loans (NPLs): a secured tranche (with guarantees) worth €57 million, corresponding to 120 individual debtors and another 150 from small and medium-sized enterprises (SMEs), with collateral consisting of real estate valued at around €80 million; and another unsecured tranche worth €63 million of problematic SME loans, 60 per cent of which are insolvent.

BPI, meanwhile, has the “Copper Project”, a toxic loan portfolio worth €85 million, of which 62 million are unsecured loans, 12 million are secured loans and another 11 million are what are known in financial jargon as single names.

None of the banks would comment on the deals.

Original Story: ECO | Author: Alberto Teixeira
Translation and edition: Prime Yield

Default affects 28.6 per cent of families, says CNC

Brazilians were both more indebted and more in arrears between February and March, according to the National Confederation of Trade in Goods, Services and Tourism (CNC).

The proportion of families with overdue bills rose from 77.9 per cent in February to 78.1 per cent in March, according to the Consumer Indebtedness and Default Survey (Peic). However, the result is still lower than a year earlier, in March 2023, when 78.3 per cent of households were in debt.

“This result shows an increased demand for credit by families, taking advantage of lower interest costs,” the CNC said in its release of the study.

For the purposes of the survey, debt is defined as accounts payable in the form of credit cards, overdrafts, store bills, payroll loans, personal loans, post-dated cheques and car and house payments.


After five consecutive months of decline, the proportion of consumers with overdue bills rose from 28.1 per cent in February to 28.6 per cent in March. In March, the proportion of households in arrears was higher at 29.4 per cent.

“This increase in arrears is also reflected in the increase in the proportion of families who will not be able to pay their debts, which is the most complex group of defaulters, but with a difference of only 0.1 percentage points and in this case already exceeds the indicator for the same month last year,” the CNC said.

The proportion of families who said they were unable to pay their debts and therefore remained in arrears rose from 11.9 per cent in February to 12.0 per cent in March. The result is still higher than in March 2023, when 11.5 per cent were in this situation.

“In order to increase their disposable income, families have been trying to extend the deadline for paying off their debts. So much so that the time spent in debt reached 7.1 months in March 2023, the highest level since April 2022,” said CNC economist Izis Ferreira in a statement.

Poorer people drive up debt and defaults

From February to March, the increase in debt and defaults was driven by lower income families. In the group with a monthly family income of up to three minimum wages, the proportion of people in debt rose from 79.2 per cent in February to 79.7 per cent in March.

In the lower middle class, with incomes between three and five minimum wages, the proportion of people in debt fell from 79.5 per cent in February to 79.3 per cent in March. In the group earning between five and ten minimum wages, there was a fall from 75.8 per cent to 75.0 per cent. In the group earning more than 10 minimum monthly wages, the share remained stable at 71.4 per cent.

In terms of arrears, the proportion of families in arrears in the group with a monthly family income of up to three minimum wages rose from 35.8 per cent in February to 36.4 per cent in March.

In the lower middle class, with incomes between three and five minimum wages, the proportion of defaulters remained at 26.0 per cent in March, the same as in February. In the group earning between five and ten minimum wages, there was an increase from 20.5 per cent in February to 20.7 per cent in March. In the group earning more than 10 minimum monthly wages, the proportion of defaulters fell from 14.6 per cent to 14.3 per cent.

Original Story: Isto é Dinheiro
Translation and Edition: Prime Yield

Banco de España

Bank of Spain will be supervising servicers

The Bank of Spain will supervise servicers, platforms that manage the recovery and sale of portfolios of non-performing loans (NPL) and real estate assets sold by banks, such as Intrum, Servihabitat, DoValue, Hipoges, Diglo and Lexer. Their competence will come with the regulations being finalised by the government to transpose into national law the 2021/2167 directive approved in 2021 in Europe and which countries had to incorporate before 29 December last, according to sources familiar with the document, as confirmed to

The industry has been in favour of the Bank of Spain from the outset because of the nature of the assets managed by the servicers (portfolio of debt and banking assets), although their allocation was not entirely clear.

The reluctance was due to the fact that they are not financial institutions, but the agency already supervises other non-financial companies with functions related to the sector, such as valuers or money transfer companies. The directive regulates a sector that, in Spain as in many other countries, lacks specific and comprehensive regulation.

It aims to establish a common legal framework for credit managers and purchasers of portfolios originated by European banks. Most countries have implemented the Directive, but the early elections in Spain interrupted the process.

The regulation will require credit managers to be authorised in one EU member state and then be able to operate in any other with a European passport, and it will be the supervisors of those countries who will monitor their activities on the portfolios they manage in each market. An official register will be set up for authorised persons.

They will have to comply with certain requirements, such as having a registered office in a Member State, having sound governance systems and adequate internal control mechanisms, or dealing diligently and efficiently with the claims of the holders of the loans they manage.

Doubtful loan portfolios

The competent authorities will have supervisory, investigative and sanctioning powers and may even revoke the authorisation in certain circumstances. Purchasers of portfolios will not be subject to authorisation requirements, but will be subject to certain reporting and other requirements, such as the appointment of a credit manager if they do not perform this function themselves.

For their part, banks will have specific reporting obligations to potential purchasers to enable them to value the portfolios and will have to report to the supervisor on the transactions they undertake. For the customer or creditor, protection will be improved by obliging the purchaser of his debt to notify him of the transfer.

When transposing the Directive, the Member States may apply more ambitious rules than those laid down in the Directive, such as extending its application to portfolios held by operators other than banks, but the tendency in the Member States has been to limit it to portfolios of doubtful debts whose sale or transfer has taken place since 1 January. This application would exclude portfolios of, for example, mortgages or short-term receivables.

Original Story: El Economista | Author: Eva Contreras
Translation and Edition: Prime Yield

Morgan Stanley to sell € 4.8 billion ‘Project Alphabet

Morgan Stanley has been appointed by a Greek liquidator to sell €4.8 billion of loans made by Greek banks that failed during the country’s decade of economic turmoil. 

The deal, dubbed Project Alphabet, comprises three portfolios of mostly non-performing loans (NPLs) from a group of 13 banks that are in the process of being liquidated, according to people familiar with the transaction. The debt includes secured retail loans, secured corporate loans and unsecured transactions, the same sources told Bloomberg News.

Although the deal is in its early stages and subject to change, it is expected to close in the first half of the year.

Original Story: Bloomberg News | Author: Esteban Duarte and Sotiris Nikas
Edition: Prime Yield

Banks increase profitability and capital and improve efficiency in 2023

In 2023, the banking sector became fatter. According to the Bank of Portugal, profits increased due to interest income, and as a result profitability grew, capital was strengthened and the efficiency ratio also improved.

Banking profitability “continued its growth trajectory with return on equity (ROE) standing at 14.8 % in annual terms”, 6.14 percentage points more than in 2022, says the Bank of Portugal in its quarterly analysis of the Portuguese banking system.

This growth reflects the increase in net interest income (the difference between interest paid by customers and interest paid by banks) due to the increase in interest rates by the European Central Bank (ECB) to curb inflation.

Return on assets (ROA) also improved, standing at 1.28% (up 0.59 percentage points).

Although slight, the cost of credit risk increased by 0.16 percentage points to 0.45%, due to the strengthening of credit impairments by the banks.

In the note from the supervisor led by Mário Centeno, for banks as a whole, it is also stated that the cost-to-income ratio (dividing operating expenses by operating income to obtain the cost benefit) improved, falling 13.7% compared to 2022 and standing at 36.9%. The increase in operating income contributed to this, as did the improvement in net interest income.

According to the Bank of Portugal’s note, asset quality also improved. The non-performing loans (NPL) ratio fell 0.2 percentage points to 2.7%, an evolution that reflects not only “the reduction in NPLs” but also “the increase in productive (risk-free) loans”.

In this context, the gross NPL ratio for companies stood at 5% (down 0.8 percentage points), due to the reduction in NPL. In the private segment, the gross NPL ratio remained at 2.4%.

In terms of capital, both the total own funds ratio and the Common Equity Tier 1 (CET1) ratio increased by 0.7% to 19.6% and 17.1% respectively.

The average risk weight also improved, decreasing by 0.6% to 42.7%, due to the importance of the lower risk components in assets.

Original Story: Expresso | Author: Isabel Vicente | Data: 27.03.2024
Edition and translation: Prime Yield