Greece’s request to the EU’s Directorate General for Competition, to be submitted in early October, foresees €1 billion of new guarantees under Hercules III to help banks reduce non-performing loans (NPLs).

The extension of the programme by €1 billion brings to €3 billion the amount of guarantees that the State has provided or intends to provide under Hercules III (from the €2 billion initially approved), while the total guarantees under the three successive extensions of Hercules are estimated to be close to €23 billion.

The Ministry of Economy and Finance has already started exploratory contacts with the relevant EU Directorate for the approval of the additional amount of guarantees.

DBRS estimates the amount of guarantees repaid so far at €2.2 billion out of a total of €19.2 billion guaranteed by the state for 17 securitisation transactions totalling €42.8 billion. Based on the same analysis, the outstanding balance of guarantees was €17 billion at the end of June and, as DBRS notes, “the decrease of around €2.2 billion, or 11.5%, shows that the majority of business plans still need to be worked out.

Original story: Kahtimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

Greece is set to finalise its post-crisis bank privatisation efforts by early October with the sale of its remaining stake in the National Bank of Greece (NBG), sources told Reuters.

The upcoming sale will conclude a significant chapter for Greece’s banking sector, which was severely impacted during the debt crisis that nearly pushed the country out of the eurozone. This crisis led to stringent austerity measures imposed by international lenders in exchange for bailout funds.

Currently, the Hellenic Financial Stability Fund (HFSF), established in 2010 to stabilise Greece’s major banks and prevent wider financial contagion, holds an 18.4% stake in NBG. The plan is to sell between 10% and 13% of this stake, with the remainder being transferred to Greece’s sovereign wealth fund.

“The exact stake and timing for the sale will be decided next week,” one source revealed. The HFSF began reducing its holdings last year after injecting around 50 billion euros to support Greece’s top banks during the crisis.

The divestment of HFSF’s stakes in Eurobank, Alpha Bank, Piraeus Bank, and part of its NBG stake is viewed as a positive indicator of Greece’s economic recovery. However, many Greeks continue to experience the lingering effects of the crisis.

The sale of the NBG stake will be conducted through a book-building process and public offering, with JP Morgan advising on the transaction. If demand is strong, the government may opt to sell the full 13% stake.

Original Story: Greek City Times | Author: Reuters
Edition: Prime Yield

Consumer credit had been expanding at a 30% clip during the first half of the year, boosted by strong consumer demand and car sales, up 6.5% during the first six months of 2024.

Bank data show that disbursements of consumer loans nearly reached €650 million during the first half compared to €500 million during the same period in 2023.

Banks expect the figure to remain stable during the second half and reach €1.3 billion for the whole year, up from €1 billion in 2023.

Consumer loans were notoriously popular during the period, in the early and mid-2000s, that preceded the financial crisis. After tanking for several years, they once again reached the level of mortgages in 2023.

Of all consumer loans, 50% are simple loans concluded with banks, 30% concern buying a car, and the rest are concluded directly with retailers.

In the loans concluded with banks, the average loan is nearly €6,000, payable within four years. Car loans average €11,500, payable in 4.5 years, while loans from retailers are both much smaller and shorter-term, averaging €800 and payable in 1.5 years.

But the latter category is the fastest-growing because approval is immediate, provided – and this is the difference from 20 years ago – that the retailer accesses the borrower’s tax and credit history.

Besides buying a car, most consumer loans are used for renovations and buying household equipment. Many parents also borrow to cover the costs of their children’s studies, accommodation and spending, mostly abroad.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

Deposits showed a significant increase in the Greek banking system last month, while corporate credit also posted a notable expansion, according to the latest official figures.

Bank of Greece data showed a significant rise in new loans to businesses by €3.1 billion on a monthly basis in June, bringing credit expansion back to a double-digit upward rate of 10.3%.

The increase in disbursements from banks, combined with the strengthening of tourism revenues, also boosted business deposits by more than €3 billion in June compared to May, raising the total of deposits held by both businesses and households to €194.8 billion at the end of June.

Since the beginning of the year, household and corporate deposits have increased by €5.1 billion, most of which – close to €4 billion – comes from the increase in bank balances held by businesses: From €45 billion they jumped to €49 billion. Household savings have increased by €1.1 billion, as in end-June they reached €145.8 billion, from €144.7 billion in January.

That significant expansion is a result of the growth of the economy, fueled by the rise of tourism among other things. However, it is also due to a significant extent to the jump in new disbursements from banks to finance new investment projects through the Recovery Fund and other financing programs for businesses. 

New disbursements that are traditionally “rushed” at the end of each quarter due to the closure of banks’ balance sheets temporarily inflate the balances of deposits held by businesses in banks, until these funds are used up and spent on new investments. The acceleration of financing in the second quarter of the year was foreseen by the managements of the banks, as the disbursements were significantly short of the signed contracts of the Recovery Fund and are expected to accelerate further in the next two years in order to achieve the absorption of the resources.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

The latest data show that the non-performing loan (NPL) landscape in central, eastern and south-eastern Europe (CESEE) remains resilient, with stable volumes and ratios across most jurisdictions. As for Greece, the NPL market stayed buoyant, in contrast to the more subdued transaction flows in the CESEE region, says the latest NPL Monitor.

According to the study produced under the scope of the Vienna Initiative, the Greek market remained robust as a lot of market movements (some successful and some not) came in the form of smaller transactions in 2023, without hitting the headlines. And, although only €2.8 billion was sold directly by credit institutions, there was significant activity in secondary markets.

 Banks now approach portfolio sales more from a tactical perspective than as a crisis response. Consolidation dynamics in the credit servicers industry also helped to expand the secondary flow in 2023. 

Regulatory activity, rather than macroeconomic headwinds, has influenced deal activity in recent months. In Greece, the Hercules Asset Protection Scheme (HAPS) was renewed in December 2023 with a guarantee ceiling of €2 billion and expiry in 12 months, paving the way for more activity in the primary markets. Attica Bank and Pancreta Bank are expected to take advantage of the extension.

Original Story: EBRD (release) | Author: Nigina Mirbabaeva
Edition: Prime Yield

Bain Capital Special Situation has reached an agreement to acquire the the Andros Portfolio from Alpha Leasing, a subsidiary of Alpha Bank.

The Andros portfolio consists of Greek non-performing loans (NPL) and will, subject to regulatory consent, be acquired by Hellas Capital Leasing, a Greece leasing company wholly owned by funds managed or advised by Bain Capital.

This will be Bain Capital Special Situations’ seventh transaction involving European leasing portfolios, a sector in which it has acquired receivables with a c. €2.8 billion of gross book value.

Akin was the legal adviser of Bain Capital Special Situations in this agreement.

Original Story: Akin
Edition: Prime Yield

Attica Bank, Greece’s fifth largest lender, announced on Monday an initial agreement to merge with the smaller Pancretan Bank in an effort to clean up its balance sheet and create a new banking organisation.

The new entity will conduct later this year a capital boost that will be used to cover its capital needs and reduce its non-performing loan exposure.

“The two shareholders confirmed that an agreement in principle on a commonly accepted basis had been reached,” the bank said in a statement, without providing more details

The Greek banks bailout fund, the Hellenic Financial Stability Fund, owns 72.5% of Attica, with Pancretan holding 5%, Thrivest Holding 4.4% and pension funds about 10%.

Original Story: Reuters
Edition: Prime Yield

The government has threatened banks with state intervention unless they reduce the fees they charge clients for various banking activities.

Speaking at the annual general assembly of the Hellenic Banks Association, Minister of National Economy and Finance Kostis Hatzidakis pointed out that the non-settlement of the issue of bank commissions helps neither the banks, nor the government, nor the society.

He went on to call on Greek banks to adopt fairer systems based on the practices of other European banks or businesses with large client networks in Greece, so that a government legislative intervention is not needed.

The minister also announced a small quantitative expansion of the “Hercules” program of nonperforming loans’ securitization, with the aim of further reducing bad loans.

He further spoke of a small time extension for the inclusion of self-employed and freelance professionals in the IRIS system, who have been notified by the tax administration (AADE) about their delay, given that the period of implementation of the measure coincided with the interconnection of cash registers with POS.

Credit sector priorities

Hatzidakis presented five priorities for the banking sector. They are: Supporting the sector continuously and with all available competition tools (referring specifically to the fifth systemic bank to be created through the absorption of Pancreta by Attica Bank); the settlement of all outstanding issues in relation to the “Hercules” program; stronger support for the real economy and especially for small and medium enterprises; further strengthening of transparency and fairness in commissions; and rapid expansion of the IRIS direct payment system.

However, Hatzidakis underlined that the next step will be the extension of direct payments to all businesses and to the entire range of transactions, both in e-commerce and in stores, by March 2025.

“The government wants a robust banking system that acts as a driver of economic growth. However we also want a banking system with competition between banks. A banking system that will provide attractive returns to savers and liquidity to businesses and households,” noted the minister.

Original Story: Ekathimerini
Edition: Prime Yield

Debt management companies, also known as servicers, have so far settled non-performing loans (NPL) amounting to €15.2 billion on the Greek market since 2022, according to Ekathimerini.

The total debt they manage amounts to 90 billion euros, representing the dues of 2,271,548 borrowers, of which 80% are loans sold to funds, while the rest are loans still owned by banks.

At the end of March, the total amount of loan agreements reached € 1.2 billion. Of this, bilateral agreements and settlements under the Katseli Law reached €1.1 billion, and the remaining €100 million was arranged through the out-of-court mechanism, where 65,790 applications were submitted, representing debts of €32.1 billion.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

Greek lender Eurobank is preparing to sell a mixed portfolio of non-performing loans (NPLs) worth €232 million, according to its first-quarter financial statements.

The portfolio includes housing, business, small business, and consumer loans.

At the end of 2023, Eurobank classified this portfolio, known as Portfolio Leon, as held for sale, initiating negotiations with potential investors. The bank also recognised an additional impairment loss of €55 million, impacting its 2023 financial results.

In March, Eurobank revised the portfolio’s scope, adding loans with a gross book value of approximately €240 million. This adjustment increased the portfolio’s total gross book value from €398 million to €638 million.

According to the financial statements, the expected sale price of the portfolio is €232 million, which is 36.3 per cent of its gross book value. Consequently, the impairment provision stands at €406 million.

The expansion of Project Leon by €240 million, with these loans reclassified as held for sale, reduced the group’s non-performing exposures (NPEs) by €0.2 billion to €1.3 billion.

This reduction lowered the NPE ratio from 3.5 per cent at the end of 2023 to 3 per cent. The coverage ratio of NPEs by provisions increased to 92.6 per cent from 86.4 per cent at the end of 2023.

Moreover, as part of its NPE management strategy for 2024-2026, submitted to the Single Supervisory Mechanism (SSM) last March, Eurobank said that its aim was to achieve an NPE ratio of 3.2 per cent by the end of 2026. The bank has already reached this target.

Original Story: Cyprus Mail | Author: Kyriacos Nicolaou
Edition: Prime Yield

The Bank of Greece’s (BoG) data for the first quarter of the year confirm the recovery in corporate financing, which will support credit expansion in 2024, as the net flow of financing moved into positive territory in the order of 333 million euros.

The net flow of financing captures new loan disbursements after repayments of existing debt, and the positive sign in the first quarter is a consequence of the increase in borrowing of €1.9 billion in March, which raised the rate of credit expansion to businesses to 8%.

Loans to enterprises amounted to €76.4 bn, of which €67.4 bn are loans to industry, trade, tourism, construction, etc. – i.e. non-financial businesses (NFC) – and a further €8.9 bn are loans to insurance companies. A further €4.5 billion are loans to professionals, farmers and sole traders, which make up a small proportion of business loans. In addition to the high cost of money resulting from the rise in interest rates, the reluctance of sole proprietors and especially the self-employed to borrow is also attributed to widespread tax evasion and undeclared income, with the result that their low income status does not allow them access to bank loans.

According to the BoG’s figures, business lending, with a focus on small and medium-sized enterprises (SME), is the main driver of the acceleration in financing, which is currently being boosted by loans from the Recovery and Resilience Fund (RRF), which ensure low financing costs. According to the banks’ estimates, the rate of credit expansion to businesses will rise to an average of 5% over the three years 2024-2026, a period that coincides with the end of the RRF, whose resources should have been absorbed by August 2026.

On the contrary, loans to households continued to show a negative net financing flow both in March (-€21 million) and in the first quarter (-€201 million). The big problem is mortgages, whose balances are constantly shrinking as repayments exceed new disbursements, resulting in a negative flow of €292 million at the end of the first quarter.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

After being urged by Bank of Greece Governor Yannis Stournaras, the European Central Bank (ECB) is reportedly poised to let the country’s Big four banks pay dividends when supervisors take it under consideration in June.

That was reported by POLITICO, citing unnamed Greek banking sources who said the banks will be able to pay out €840 million as the financial institutions have come back to big profitability.

The country’s banks had to be bailed out with €50 billion during a 2010-18 financial and austerity crisis that also saw them under a mountain of bad loans since sold over to collection agencies hounding people to repay.

If approved, it would be the first time in 15 years that bank shareholders could cash in on their investments, another Greek banking source also not identified told Pro Morning Central Banker (MCB) Europe.

National Bank of Greece payouts will be capped at 20-25% of the lenders’ 2023 profits, Piraeus Bank is expected to return 10% of its profit to shareholders, Alpha Bank 20%, and Eurobank 25%, all in line with the banks’ own guidance, the source said.

National Bank of Greece shareholders will have to lower their expectations, as the ECB is only likely to let it pay out 25% of its profits, below the 30% the bank guided for in March.

The payouts of the four systemic lenders will be smaller than for most of their European peers, as the supervisor still has concerns about the quality of their capital. Around 40% of the groups’ capital is in the form of deferred tax credit (DTC), which the ECB sees as lower-quality equity, said Business Daily Greece.

Earlier, Stournas told Yahoo Finance in an interview in Frankfurt – the ECB’s home – that the recovery of Greek banks has to be acknowledged. “It’s the time to allow dividends,” Stournaras said. “This decision and the exact parameters will be taken later in the year — in June.”

“We all know the constraints, but nobody can deny the huge improvement in the NPL (Non-Performing Loan) situation, the profitability situation, the capital metric situation, the liquidity situation,” he said. “The time has come for the supervisors to consider allowing the shareholders of the banks to get some dividend.”

Original Story: The National Herald
Edition: Prime Yield

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

The Bank of Greece is imposing a cap on new mortgages to prevent excessive lending. In other words, the country’s central bank has decided to set a maximum loan limit in relation to the value of the property and a maximum limit for servicing the debt from housing loans in relation to the borrower’s total income.

The limits will be more flexible for first-time buyers in an effort to make it easier for young people to access bank loans to buy property.

The new limits will apply from 1 January 2025 and provide that the loan cannot exceed 80% of the commercial value of the property. Exceptions will be made for first-time mortgage borrowers, for whom the loan cannot exceed 90% of the value of the property. In addition, the cost of servicing a borrower’s loan obligations cannot exceed 40% of their annual income. The exception is again young buyers, for whom the limit rises to 50%.

Under the new rules, banks will be allowed to exceed the above two limits by 10% of the number of new disbursements, and the excess will be tracked separately for first-time buyers and other borrowers.

A first-time buyer is defined as someone who borrows from a bank for the first time to buy a house, regardless of whether they already own a property – e.g. following a parental allowance. The limit for the calculation of the debt service ratio (debt service in relation to income) will concern all the debts one has with the bank. In particular, if the instalment of a mortgage consumes 30% of your income, the bank should also take into account any other debts – e.g. from consumer loans or cards – and add these costs when calculating the index.

Net income, i.e. income after tax and social security contributions, is also taken into account when calculating the debt service ratio.

The setting of limits for housing loans is a measure applied by the majority of European countries, where the limits are in fact much stricter than those applied in the United States.

Original Story: Kathimerini | Autor: Evgenia Tzortzi
Edition: Prime Yield

Greece continues to have the worst performance in household credit in Europe, registering a consistently negative rate, which was -1.7% in January against a 0.3% increase in the eurozone, according to a report published by DBRS Morningstar, focusing on the “slow production of new mortgage loans.”

The rise in interest rates and high inflation have made the growth rate of loans in the eurozone shrink, as it plunged from 4.5% in the first half of 2022 to a marginally positive rate in 2023. This contrasts with a steady contraction in Greece, due to large repayments exceeding new disbursements.

The aversion to borrowing by households is observed despite the fact that the vast majority of new mortgage disbursements in Greece are at fixed interest rates, which, through successive reductions made by Greek banks recently, have fallen to historic lows. 

Fixed term rates start at 3% for a 3-year term, while last week Eurobank further reduced the 10-year fixed rate and above by 0.30 points, which starts at 4.10% and reaches 4.30% for periods of 15, 20, 25 and 30 years.

As DBRS observes, the high interest income of Greek banks, which increased by 51% year-on-year, is mainly linked to the strengthening of the portfolio of business loans, which grew by 5.1% in 2023, against an average increase of just 0.2% in the eurozone, despite stricter lending criteria, high interest rates and high repayments. 

Interest income amounted to €8.1 billion at the end of 2023 compared to €5.4 billion in 2022 and according to DBRS this is mainly due to the overall better performance of the Greek economy, as well as the disbursement of loans linked to the country’s growth and the Recovery Fund funds, which “will continue to support the growth of the loan portfolio combined with some recovery foreseen for new mortgages.”

Fee income in 2023 was €1.8 billion compared to €1.7 billion in 2022, up 7%, driven by increased trading income, grant activity and sales growth activity investment and bancassurance products.

Original Story: Kathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

The Hellenic Financial Stability Fund (HFSF) is one step before the complete divestment from Greece’s four systemic banks, after the successful sale of all the shares it owned in Piraeus Bank.

In this way, the cycle of recapitalizations in the Greek banking system will be officially closed and, by extension, for the Greek economy, which is showing resilience as, despite the new challenges, it is moving at a growth rate four times the average of the eurozone.

The HFSF has fully divested from Eurobank, Piraeus Bank and Alpha Bank while maintaining a stake of approximately 18% in National Bank and a holding of approximately 70% in Attica Bank.

As pointed out after the completion of the divestment of the HFSF from Piraeus Bank by the government, the HFSF, the Bank of Greece and financial analysts, this was a vote of confidence by the international investment community, not only for the Greek banking system, but also for the Greek economy.

As noted by the Minister of National Economy and Finance, Kostis Hatzidakis, on the occasion of the successful completion of the sale of 27% of Piraeus Bank shares to foreign and Greek investors, the banking system is turning the page: “From the crisis and the recapitalizations, [we have moved to the] time when high-quality investors express, as was seen in the last months, their interest in all systemic Greek banks,” said the minister, pointing to the fact that the investment interest expressed was eight times greater than the offer.

He added: “The latest developments reward the strategy of the HFSF management which prepared and organized the process effectively. They underline the correctness of the government’s choices, not only for the way and the time the divestment of the state proceeded, but also more generally for the banking system itself. And they are, after all, a very serious national success.”

Double benefit

The successful cycle of the HFSF divestment from the systemic banks started with Eurobank and was followed by Alpha, National and Piraeus. According to data Hatzidakis presented to Parliament in February, the state has not only an accounting but also, above all, a more general benefit from divestment. The data show that for the rescue of the four systemic banks, the Greek state – through the HFSF – has paid a total of 30.9 billion euros, while the benefit it has had is €34.8 billion. That is, the benefit of the state in relation to the €30.9 billion it gave for the recapitalization is €3.9 billion, not counting the 2013-2023 dividends, amounting to €5.5 billion paid by the Bank of Greece to the state, mainly due to the provision of extraordinary liquidity support to the banking system through the emergency liquidity assistance.

Speaking to Parliament on February 19, Hatzidakis emphasized that the results of the divestment in Eurobank, Alpha and National Bank prove the correctness of the government’s choices.

Hatzidakis’ position is echoed by many experts, including University of Athens professor of Finance Dimitris Kenourgios, who told Kathimerini English Edition that developments “signal a new era for our banking system. We appear to have overcome, with evidence, a period of crisis during which almost half of the loan portfolios were not serviced and banks were unable to play the role of the credit supplier in the Greek economy.”

By saving the systemic banks, of course, the deposits of the Greek citizens were also saved, which were approximately 10 times the cost of the recapitalization, and businesses and households were protected from collapse, according to government officials.

Kenourgios agreed that the purpose of the state’s investment has been fulfilled, even when the PSI haircut and the CoCo redemption are not factored in: “The revenues of the state will be no more than €5 billion, but the flipside of the coin is that through the recapitalizations the banks assisted the Greek economy, the Greek households and the Greek enterprises, and bad loans were reduced. Therefore there has been an indirect effect of the recapitalizations for the Greek economy,” he explained.

Original Story: Ekathimerini | Author: George Georgakopoulos
Edition: Prime Yield

doValue Greece has inked a pivotal servicing contract with Attica Bank SA, marking a significant expansion in its portfolio. The deal, involving the management of Non-Performing Exposures (NPEs) worth approximately €500 million Gross Book Value (GBV), is integrated into a larger decuritized portfolio known as Project Omega, which was reassigned to Attica Bank in February 2024.

Attica Bank, ranking as the fifth-largest banking entity in Greece, provides a comprehensive spectrum of financial services to individuals and SMEs, including deposit, investment, and insurance products. With doValue Greece now managing €30 billion of NPEs, including 7 HAPS securitizations, this transaction further solidifies its standing in the Greek Non-Performing Loan (NPL) market.

Original Story: BNN Breaking | Author: Sakak Costu
Edition: Prime Yield

Greece’s bank bailout fund is likely to sell its entire 27% stake in Piraeus Bank  in early March, a source close to the process told Reuters.

It will be the fourth such sale since October by the Hellenic Financial Stability Fund (HFSF) that was set up to recapitalise Greek banks during the country’s decade-long financial crisis from 2008-2018.

“There is strong interest from many foreign investors,” a second source with knowledge of the matter told Reuters.

Piraeus, Greece’s third-largest lender, has a market value of 4.9 billion euros, which means that state-controlled HFSF could sell its stake for more than a billion euros.

Having injected about 50 billion euros into the sector, HFSF began reducing its holdings in four major Greek banks last autumn.

It sold a 20% stake in National Bank NBGr.AT and 9.4% of Alpha Bank in November and a smaller stake in Eurobank in October.

Original Story: Reuters / Nasdaq
Author: Renee Maltezou
Photo: Reuters