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

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

Greece sets cap on new mortgages

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

Acropolis tourism of greece

Greece continues to have the worst performance in household credit

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

HFSF is one step before its full divestment from banks

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 logo

Attica Bank selects doValue Greece to manage a €500 million NPE portfolio

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 likely to sell Piraeus Bank stake in early March

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

Bank of Greece to set mortgage caps

The Bank of Greece, in cooperation with lenders, intends to set limits on mortgage amounts in relation to the commercial value of the property and the monthly instalment to be paid by new borrowers.

The limits will be more flexible for first-time buyers – those taking out a mortgage for the first time to buy a property – with the aim of making it easier for them to buy a property on credit.

According to Ekathimerini’s sources, the new limits for the housing market concern the amount of the loan that can be obtained, which cannot exceed 80% of the commercial value of the property, or 90% if it is a new buyer; and the instalments of the loan cannot exceed 40% of the disposable income, or 50% if it is a new buyer.

According to bank sources, the proposed measures will allow 10% of the total number of loans to be approved each year to exceed the above limits, provided that this is justified by the profile and financial situation of the prospective borrower.

The setting of limits on bank lending to the housing market is a measure used in most European countries and is expected to be introduced for the first time in this country.

Limiting the amount of the loan in relation to the value of the property will act as a buffer against a fall in commercial property prices that would jeopardise these loans, while the limit in relation to the average household’s cost of meeting housing needs will prevent over-borrowing.

The new limits will be “imposed” by a Bank of Greece decision to be issued in mid-March, and will be implemented from the beginning of 2025 to allow for the necessary adjustment by banks.

The measure will not overturn the lending policies of banks, which already apply similar rules to new loans they grant. According to disbursement data for 2023, 94% of the loans granted were for less than 80% of the value of the property.

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

Real estate and NPLs lead FDI in 2023

The leading position of real estate in foreign direct investment (FDI) in Greece is maintained and even strengthened in 2023, as the figures show, maintaining the reflection on whether and how the country’s production model will eventually be able to change.

FDI has “resurged” in recent years, rising from just €249 million in the fateful year of 2010 to a record €7.9 billion in 2022. However, foreign investors prefer to invest mainly in tourism and real estate, rather than in industry or the creation of new production units from scratch, so-called greenfield investments.

In 2023, Bank of Greece data show that while total FDI fell short of the 2022 record, real estate investment surged. In January-September, FDI reached €3.9 billion, a far cry from the €7.9 billion for the whole of 2022. In contrast, real estate investment reached €1.6 billion compared to €1.2 billion in January-September 2022, an increase of 30%. Overall, FDI in real estate in 2022 will amount to around €2 bn, i.e. 25% of the total.

The tightening of Golden Visa requirements certainly contributed to this jump in 2023, with many foreign buyers rushing to secure a Golden Visa before the new measures took effect.

In addition, analysts note that investments in financial activities, as shown by the Central Bank’s data, amounting to €2.4 billion in 2022 (there are no figures yet for 2023), are also to some extent indirectly related to real estate. This is because this category includes the funds placed for the purchase of non-performing loans from funds.

Moreover, data on gross fixed capital formation (as derived from GDP) from the Hellenic Statistical Authority show that investment in residential construction in January-September rose to 14.7% of the total (€3.2 billion), up from 10.7% of the total in the same period of 2022. This percentage is, of course, far below the 42% of investment that residential construction represented in 2007. It is also very low compared to the corresponding 27.9% in the euro area.

Original Story: Ekathimerini | Author: Eirini Chrysolora

Edition: Prime Yield

Greece debt

Greeks’ overdue debt outsize GDP

The overdue debt owed by Greeks to the state and financial institutions – i.e. banks and funds – is more than the country’s gross domestic product, reaching 224.2 billion euros.

These debts are divided between public and private sector entities as follows: €105 billion is owed to the tax authorities, accounting for 47%; €46 billion to social security bodies, representing 21%; €11.7 billion to banks, representing 5%; and €61 billion to funds managed by servicers, an amount that represents 27% of the total overdue private debt.

This amount, which exceeds Greece’s GDP, does not include the current debt of businesses and households, which amounts to €113.2 billion, raising the total amount of debts to €337.4 billion.

The out-of-court mechanism is a key tool for settling overdue debt, and according to data from the General Secretariat for Private Debt Management, 12,025 arrangements had been made for debts to financial institutions and the public for a total of €4.36 billion in initial debts until December 2023.

Last year, successful arrangements and new application submissions reached record numbers, a fact that, according to the Ministry of National Economy, reflects the dynamism of this particular tool that is significantly used by debtors and contributes substantially to the management and reduction of private debt. From the report of the last six months, it stems that an average of 950 arrangements per month are provided through the tool, while the continuous interest is also reflected by the rate of launching new applications on the platform, which exceed 3,500 every month.

Based on the latest progress report for December 2023, €18 billion in debt is on track for settlement. Most applications concern citizens with debts in the range of €50,000-200,000. From the analysis of the arrangements, it appears that 45% of the arrangements for debts to financial institutions receive a haircut of more than 30%, while for debts to the state, the corresponding rate of applications that receive a haircut of more than 30% is 33%. 

Original Story: Ekathimerini

Author: Evgenia Tzortzi

Edition: Prime Yield

Photo: Getty Images

Piraeus Bank

Greece plans to start stake sale in Piraeus Bank by March

Greece’s bank bailout fund will start a process to sell a stake in Piraeus Bank, the country’s third largest lender, by March, two sources familiar with the matter told Reuters.

It’s the third such sale since October from the state- controlled Hellenic Financial Stability Fund (HFSF), which was set up to recapitalise Greek banks during the country’s decade-long financial crisis which ended in 2018.

HFSF holds 27% in Piraeus Bank, with a market value of 4.37 billion euros, and has yet to decide whether to sell all or part of its shareholding.

“The plan is for the sale to take place at the end of February or early March,” a banker with knowledge of the matter told Reuters.

“There is no final decision yet on the stake. It might be 17%-18% or the whole stake,” he added.

A second source involved in the process said that it would likely be a combined sale to retail and institutional investors.

HFSF has mandated BofA as an advisor on its stake.

After injecting about 50 billion euros into the sector, HFSF started reducing its participation in four major Greek banks last autumn as part of its divestment from the lenders which have been recovering.

Original Story: MarketScreener | Author: Reuters
Edition: Prime Yield
Photo: Serge Mouraret / Alamy Stock Photo

Credit expansion of 4% is expected for 2024 and 2025

The Greek banking sector will see this and next year a credit expansion of 4% per annum, per Eurobank Equities, ensuring resilience in interest income and profitability for Greek banks.

This is ahead of the imminent reduction of interest rates by the ECB, expected to start from the second quarter of this year.

Bank of Greece data put credit growth in January-November 2023 at 2.8%, affected by low financing to households. In contrast, credit expansion to businesses stood at 6% and the net flow of financing – new loans to businesses after repayment of existing debts – amounted to 1.1 billion euros in the same period.

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: FreeImages (Jonte Remos)
Edition: Prime Yield

Banks’ profitability ‘honeymoon period’ over

Bank profitability will reach record levels in 2023, but is expected to decline thereafter, a trend that will intensify after the interest rate cut from mid-2024. Interest expenses have tripled in 9 months.

Banks’ profitability is expected to weaken in the new year, a trend that will be reinforced by the gradual reduction in interest rates expected from mid-2024.

The year ends with an impressively strong performance by domestic banks, with profitability reaching record levels as a result of the extremely favourable interest rate environment.

The ECB’s sharp rise in interest rates led to a surge in banks’ interest income, as they benefited from the almost immediate pass-through of the increases to borrowers. At the same time, they were able to pass on the increases to depositors to a lesser extent due to the excess liquidity in the system and the structure of deposits with the absolute dominance of demand deposits. 

The limited volume of deposits and the small size of the average deposit make it pointless for depositors to seek better returns through time deposits. As a result, the bulk of deposits remain demand deposits with very low interest rates.

Despite this policy, however, the rise in interest rates is gradually being passed on to depositors, albeit with a time lag. It is significant that in the nine-month period from January to September, according to the Bank of Greece, banks’ interest income increased by +96.5%, while interest expenses amounted to €4.07 billion, an increase of +211.30%.

Thus, the final picture of bank profits for the nine months is a modest +4.6%, far from the impressive +96.5% of interest income.

Bank executives estimate that bank profits will peak this year, largely due to the positive interest rate environment, and gradually decline in the following years, while remaining at a high level.

They note that pressure on interest expenses will intensify, while the gradual decline in interest rates that most expect after the first half of 2024 will lead to a decline in interest income.

Moreover, despite claims to the contrary, there is fierce competition among commercial banks in corporate lending, where credit growth is strongest, and this competition is driving down interest margins.

Despite the expected decline in bank profitability from the highs of 2023, the overall picture for profitability in the sector will remain very satisfactory. Moreover, profitability is expected to increase further as large banks continue to cut costs and reduce their branch networks.

Original Story: Yiannis Papadogiannis | Business Daily Greece
Image: Photo by Takis Kolokotronis in FreeImages
Edition: Prime Yield

Hercules 3 to come with stricter regulations

The National Economy and Finance Ministry’s plan for “Hercules 3” provides for additional guarantees to banks amounting to €2 billion, and for its extension until the end of 2024.

The aim is to include in the mechanism of bad-loan management at least three more securitizations of loans pending from the four systemic banks, as well as the securitizations of smaller banks, such as of Attica Bank and Pancreta Bank.

The criteria of Hercules 3 will be stricter compared to the first and the second version, as the senior notes, which will be guaranteed by the state and will have to secure a higher investment category – i.e. more chances of collection.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Sergey Klimkin in FreeImages
Edition: Prime Yield

Greece tables draft legislation expanding “Hercules” program to reduce NPL

The Greek government has just tabled in Parliament a draft law seeking to further reduce non-performing loans (NPL) in banks’ portfolios by expanding the “Hercules” programme.

The draft legislation envisages measures to introduce greater transparency, more information and respect of debtors’ rights for servicers, modernise an out-of-court mechanism and expand protection for vulnerable debtors, improving the operating framework of a sale and leaseback agency, introducing measures to boost competition, such as loan offering from non-banking agencies, and expanding transactions through the IRIS system.

National Economy and Finance Minister Costis Hatzidakis said that the government’s intervention for banks and loans combined the goal of financial restructuring and the protection of vulnerable debtors with a series of modern and fair solutions. Servicers will operate under new and stricter transparency rules, ensuring debtors are given more information. The out-of-court mechanism becomes simpler, while the expansion of the Hercules programme will operate for the benefit of the banking system. At the same time, competition in the banking system becomes more intense through initiatives such as the ability of non-banking agencies to offer housing and business loans. The Greek economy has proven to be resilient and will move even higher in 2024, while dealing with the outstanding private debt will definitely contribute towards this direction, he said.

The expanded Hercules programme, following an agreement reached with the European Commission, will have a guarantee offer ceiling of up to €2 billion and will last until December 31, 2024. The Greek state has offered guarantees worth €18.7 billion in the previous two phases of the programme, helping to reduce the stock of NPL held by banks from 40.6% in December 2019 to 8.6% in June 2023.

Original Story: Hellenic News of America |HNA
Photo: Photo by Jonte Remos in FreeImages
 Prime Yield

Housing costs in Greece are the highest in Europe

Greece has a negative lead in Europe on the income-housing costs ratio, with 27% of the Greek population spending more than 40% of their disposable income to cover housing costs. November’s Financial Stability Report by the Bank of Greece (BoG) attributed the country’s position to its low per capita income compared to the rest of Europe. 

According to the report, Greece also ranked first in terms of housing costs. The figures, reported by Nafteboriki, show that:

– Apartment prices (in nominal terms) rose by 13.9% in the second quarter of 2023, year-on-year, compared to an increase of 11.8% in 2022.
– Prices of new apartments (up to 5 years old) increased at an average annual rate of 13.8%, in the second quarter of 2023, while prices of old apartments rose by 14.1%.
– In terms of geographic region, the prices in the country’s major urban centers rose significantly and more specifically in Thessaloniki (16.4%) and other major cities (14.6%), which exceeded the corresponding average growth rate for the entire country.

In the short term, foreign investment interest will persist, especially in privileged locations in the Attica basin and tourist areas. According to the BoG, expectations for the Greek residential real estate market remain positive, despite the uncertainties in the domestic and global economy.

Original Story: Ekathimerini |Staff 
Photo: Photo by Takis Kolokotronis in FreeImages
Edition: Prime Yield

Greece gets €1.07 billion from the sale of 22% of the National Bank

Greece has secured revenues of €1.066 billion from the disposal of 22% of National Bank, a process oversubscribed eight times.

As Minister of National Economy and Finance Kostis Hatzidakis underlined, this is the “most successful transaction in the last three years in the EU in terms of the demand manifested and the minimization of the discount on the offering price,” set at €5.30 per share from a provisional price range of €5-5.44. Demand for the HFSF shares at National exceeded all expectations, reaching 9.5 times for the international book and 2.2 times for the Greek book. The shares immediately attracted very strong interest from leading international institutional investors, with a total of more than €30 trillion of funds under management.

As the HFSF bank bailout fund noted, “several of them have included a Greek bank in their portfolio for the first time, or again after many years.”

The participation of long-term investors covered more than half of the demand and according to data from the share allocation, among the big investment houses taking positions in National Bank are Fidelity, BlackRock, Capital, Allianz and Lazard.

The president of the HFSF, Andreas Verykios, thanked the international and Greek investment public “for the high response to the public offer,” which, as the managing director of the HFSF, Ilias Xirouhakis, stated, is “a resounding vote of confidence from the markets in the prospects of the Greek financial system and the growing dynamics of the Greek economy.”

At the same time, “it is recognition at an international level of the fund’s contribution to the recovery of the banking sector and to the consolidation of a climate of investment confidence in our country.”

That was also acknowledged by Bank of Greece Governor Yannis Stournaras, who contacted the management of HFSF, and those of National and Alpha, whom he congratulated for the successful moves in the privatization of the two banks. In total, from the two privatizations, of National and Alpha, the state will collect €1.36 billion.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Michalis Famelis / Wikimedia Commons
 Prime Yield

Greece to sell Alpha Bank Stake to UniCredit

Greece is pressing ahead with a plan to sell its stakes in the country’s banks, in a sign the financial industry is returning to normal after a decade-long debt crisis.

The country’s Hellenic Financial Stability Fund has agreed to sell a 9% stake in Alpha Bank to UniCredit SpA. It is also starting a process to divest a 20% holding in National Bank of Greece, a lender of which it owns about 40%. 

The HFSF, a bank bailout fund that holds the government’s stakes, has said it wants to exit all holdings in the country’s lenders by the end of 2025. It also owns stakes in Piraeus Bank and Attica Bank.

The move comes after Greece regained its investment grade credit rating at firms including S&P Global Ratings after more than a decade. At the same time, the country’s lenders have significantly cut the amount of bad loans accumulated during the debt crisis, which shaved around a quarter off the country’s GDP. Non-performing loans (NPL) now make up 5.7% of the credit portfolio of Greece’s biggest banks combined, down from 33% three years ago. 

The sales announced now follow the divestment from Eurobank Ergasias Services and Holdings SA last month, with the lender repurchasing the shares from state.

Original Story: BNN Bloomberg | Sotiris Nikas and Paul Tugwell 
Photo: Alpha Bank website
Edition: Prime Yield

New housing loans decline

Rising interest rates seriously hurt mortgage credit, affecting both the demand and supply for mortgages. This stems from the figures of the Bank of Greece, based on which mortgage disbursements fell in the second quarter of 2023 by 10.7%, while in the same period the number of loans granted showed a greater decline of 12.4%.

Loan disbursements fell from €270.3 million to €241.5 million, while the number of loan contracts signed was reduced from 3,535 to 3,097.

The picture at the six-month level is not particularly differentiated, as despite the marginal increase of 1.8% in disbursements to €507.8 million from €498.7 million in the first half of 2022, the number of housing contracts signed decreased marginally to 6,578 in the first half of 2023 from 6,596 in the corresponding period last year. 

As BoG notes in its recent financial stability report, disbursements remain low both in absolute terms and in comparison to the pre-global financial crisis level.

The decline in demand is a result of household anxiety over rising interest rates, which increase the cost of servicing their debt obligations, and rising house prices, which make it almost prohibitive to attract middle-income buyers.

The banks’ policy was not accompanied by a relaxation of credit criteria, which is confirmed by the fact that the weighted average loan-to-property ratio fell in the second quarter of the year to 61.4% from 63.1% in the corresponding period last year.

This means that those who resorted to borrowing to buy a home had available equity of 39.6% of the value of the property they purchased. Accordingly, the weighted average loan-to-income ratio stood at 3.5, indicating that the total amount of loans secured by residential real estate is almost 3.5 times higher than the annual disposable income of borrowers.

From the third quarter of the year, it is expected that the My Home program will have benefited the housing loan market, having gathered strong interest with the submission of approximately 40,000 applications since its introduction in April.

Original Story: Ekathimerini | Evgenia Tzortzi 
Photo: Photo by Svilen Milev in FreeImages
 Prime Yield

Eurobank posts lower profit up to September on higher provisions

Eurobank, Greece’s largest lender by market value, reported lower profit for the first nine months of the year, on higher bad loan provisions and operating expenses.

Net earnings came in at 980 million euros in the January-to-September period, an annual drop of 11.4%.

Provisions for non-performing loans (NPL) stood at 90 million euros in the third quarter, up from 73 million euros in the same quarter last year.

Greek banks cut their bad loan ratios to below 8% in the first half of 2023 from 45% in 2016, but the ratio is still higher than their peers in the euro zone, the legacy of a decade-long financial crisis.

Eurobank’s NPL exposure ratio (NPE) fell to 4.9% of its total loan portfolio from 5.6% at the end of September last year.

The bank last month was the first from Greek lenders to end state participation in its share capital by repurchasing a 1.4% stake from state-controlled bank bailout fund HFSF.

The completion of the 1.4% share buy-back this year will be followed by a cash dividend payment out of 2023 financial results next year,” Chief Executive Officer Fokion Karavias said in a statement.

Greek lenders have returned to profit in the last few years and hope to resume paying dividends in 2024, for the first time since the Greek debt crisis erupted in 2010.

Original Story: Reuters | Staff 
Photo: Eurobank website
Edition: Prime Yield