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
Edition: Prime Yield

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

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
Edition: Prime Yield

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

Bank bailout fund HFSF confirmed the sale of 22% of the share capital of National Bank, out of the total 40.39% currently held by the state, after the unprecedented sum of offers observed in the private placement, with the sale oversubscribed by more than eight times.

The offers collected amounted to €8.5 billion, as a result of which the fund increased the number of shares it made available from 182,943,031 to 201,237,334 in total.

Investors in the Greek public offering must subscribe at the maximum price. It should be noted that high participation was already recorded on the first day the bid book opened (November 14), with bids exceeding €6 billion, pushing the price for subscriptions to the private placement close to the upper price range.

That way, the discount was limited in relation to the current price of National Bank, on the basis of which the shares were made available through the bookbuilding process, which also discounts a lower price compared to that of the dashboard.

The participation in the private placement of large institutional investors abroad was overwhelmingly high, as well as the participation of private and special investors (institutionals) in Greece.

The fact that hedge funds received only 4% of the amount they requested is revealing of the high quality of investors, while the fact that the public proposal in Greece from private investors raised €450 million is indicative of the high demand, not including the participation of special investors who also participated in the public offering domestically.

The participation of long-term investors covered more than half of the demand and, according to the first data from the allocation of shares, among the big investment houses taking positions in National are Fidelity, BlackRock, Capital, Allianz, Lazard and investment funds Norges (Norway), GIC (Singapore), Robeco (Netherlands), RWC (America) and Wellington (America).

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

ccording to the Bank of Greece, the liquidity and funding conditions of the Greek banking sector improved further.

The Greek banking sector has positive prospects, according to the Bank of Greece (BoG) latest Financial Stability Report.

More specifically, the Greek sovereign’s return to investment grade mitigates the risks to the financial system and the outlook of the Greek banking sector is positive, the central bank said in the report.

However, it noted that heightened geopolitical risks, persistent inflationary pressures, economic growth slowdown and the risk of a sharp repricing of assets in international money and capital markets keep the risks to financial stability high.

Despite the above, banks’ profitability is improving, while the implementation of their strategies for resolving the legacy stock of non‑performing loans (NPLs) continues, it added. The banking sector’s capital adequacy is satisfactory, but banks should further shore up their capital buffers.

According to the Bank of Greece, the liquidity and funding conditions of the Greek banking sector improved further as a result of increased customer deposits and despite partial repayment of European Central Bank (ECB) funding.

As for the ratio of NPL to total loans fell marginally to 8.6% in June 2023, from 8.7% in December 2022. It should be noted that all four significant banks have now reached their single-digit NPL targets, with one of them below 5%. However, actions aimed at resolving the legacy stock of NPLs and converging with the European average (June 2023: 1.8%) should be continued.

Original Story: Naftemporiki | Staff
Photo: Photo by Jonte Remos in FreeImages
Edition: Prime Yield

Fitch Ratings has just upgraded Greece’s four systemic banks ratings, following a recent round of upgrades of Greece’s credit rating.

More specifically, Fitch Ratings upgraded Eurobank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘, and Viability Ratings (VRs) to ‘bb’ from ‘bb-‘. The outlooks on the Long-Term IDRs are Stable.

The upgrades reflect structural improvement to Eurobank’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce balance-sheet risk. This has allowed the bank to accumulate capital, strengthening buffers relative to regulatory requirements and provided greater flexibility to pursue investments and growth initiatives, which we expect to result in greater business-model sustainability.

Fitch Ratings also upgraded National Bank of Greece SA’s Long-Term Issuer Default Rating (IDR) to ‘BB’ from ‘BB-‘ and Viability Rating (VR) to ‘bb’ from ‘bb-‘. The outlook on the Long-Term IDR is Stable.

The upgrades reflect structural improvement to NBG’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce risk on its balance sheet. This has allowed NBG to accumulate capital well above regulatory requirements and provided strategic flexibility to pursue investments and growth initiatives, which we expect to result in greater business model sustainability.

Fitch Ratings upgraded Piraeus Bank SA’s Long-Term Issuer Default Rating (IDR) to ‘BB-‘ from ‘B’ and Viability Rating (VR) to ‘bb-‘ from ‘b’. The outlook on the Long-Term IDR is Stable.

The upgrade reflects the acceleration of Piraeus’s strategy to reduce risk on its balance sheet, which led to a marked reduction of its non-performing exposure (NPE) ratio to levels more closely in line with higher-rated peers. It also reflects the strengthening of its regulatory capital ratios and the resulting reduction in capital encumbrance by unreserved problem assets (which include NPEs and foreclosed assets). The upgrade further considers Piraeus’s structurally improved profitability, which will drive further capital accumulation; stable funding; and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Fitch Ratings has upgraded Alpha Bank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB-‘ from ‘B+’ and Viability Ratings (VRs) to ‘bb-‘ from ‘b+’. The outlooks on the Long-Term IDRs are Stable.

The upgrade reflects structural improvement in Alpha’s profitability, which will drive further organic capital generation and result in stronger capital ratios. The upgrade also reflects the continued downward trajectory in the bank’s non-performing exposure (NPE) ratio, stable funding and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Original Story: Greek City Times | Athens Bureau 
Photo: Alpha Bank website
Edition: Prime Yield

Part of the housing credit financing deficit, estimated at €6 bn per year, is to be claimed by mortgage credit companies, whose are now being licensed at the initiative of the Ministry of National Economy and Finance.

These are companies financed mainly by funds, but also by other entities, such as insurance companies, with the aim of lending to individuals for consumer and housing loans, but also to businesses – whether it is refinancing or new lending.

The key feature of credit companies is that since they do not rely on customer deposits, they have more flexibility in granting criteria and pricing capabilities depending on the customer’s risk.

That flexibility does not necessarily imply lower interest rates. This depends on the category in which a credit company operates and specializes, and, of course, on the customer’s profile and the credit risk involved lending them money. Borrowers who were burdened in the past or are still burdened with bad loans or who are considered high risk may be financed with a higher interest rate than the average lending rate of a bank, while other categories may pay the same or even a lower rate.

Original Story: Ekathimerini |Evgenia Tzortzi 
Photo: Photo by Jonte Remos in FreeImages
Edition: Prime Yield

Eurobank Ergasias Services and Holdings SA submitted an official request to buy back the Greek state’s 1.4% stake in the lender for €1.80 euros a share.

The lender requested the buy back from the Hellenic Financial Stability Fund, a bank recapitalization tool that was established at the start of the Greece’s bailout programs, offering just over €93.7 million for the stake, according to Bloomberg calculations. 

The fund has already started its plan to divest from the country’s lenders and Eurobank is the first bank in the process.

The bank entered into a conditional share purchase agreement with HFSF to acquire all of its issued shares held by HFSF, both parties said in statements.

According to the deal, the HFSF will launch a disposal process open to eligible investors and the sale and transfer of the shares to Eurobank is subject to “the non-selection by HFSF of a preferred bidder through the competitive process,” both sides said. 

The HFSF currently also holds a 40% stake in National Bank of Greece SA, 27% of Piraeus Bank SA and 9% of Alpha Bank SA.

Original Story: BNN Bloomberg |Sotiris Nikas 
Photo: Eurobank website
Edition: Prime Yield

Fitch Ratings has just upgraded Greece’s four systemic banks ratings, following a recent round of upgrades of Greece’s credit rating.

More specifically, Fitch Ratings upgraded Eurobank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘, and Viability Ratings (VRs) to ‘bb’ from ‘bb-‘. The outlooks on the Long-Term IDRs are Stable.

The upgrades reflect structural improvement to Eurobank’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce balance-sheet risk. This has allowed the bank to accumulate capital, strengthening buffers relative to regulatory requirements and provided greater flexibility to pursue investments and growth initiatives, which we expect to result in greater business-model sustainability.

Fitch Ratings also upgraded National Bank of Greece SA’s Long-Term Issuer Default Rating (IDR) to ‘BB’ from ‘BB-‘ and Viability Rating (VR) to ‘bb’ from ‘bb-‘. The outlook on the Long-Term IDR is Stable.

The upgrades reflect structural improvement to NBG’s profitability from higher interest rates and low deposit rates; on careful cost management; and normalised loan impairment charges (LICs) following the bank’s successful strategy to reduce risk on its balance sheet. This has allowed NBG to accumulate capital well above regulatory requirements and provided strategic flexibility to pursue investments and growth initiatives, which we expect to result in greater business model sustainability.

Fitch Ratings upgraded Piraeus Bank SA’s Long-Term Issuer Default Rating (IDR) to ‘BB-‘ from ‘B’ and Viability Rating (VR) to ‘bb-‘ from ‘b’. The outlook on the Long-Term IDR is Stable.

The upgrade reflects the acceleration of Piraeus’s strategy to reduce risk on its balance sheet, which led to a marked reduction of its non-performing exposure (NPE) ratio to levels more closely in line with higher-rated peers. It also reflects the strengthening of its regulatory capital ratios and the resulting reduction in capital encumbrance by unreserved problem assets (which include NPEs and foreclosed assets). The upgrade further considers Piraeus’s structurally improved profitability, which will drive further capital accumulation; stable funding; and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Fitch Ratings has upgraded Alpha Bank SA’s Long-Term Issuer Default Ratings (IDRs) to ‘BB-‘ from ‘B+’ and Viability Ratings (VRs) to ‘bb-‘ from ‘b+’. The outlooks on the Long-Term IDRs are Stable.

The upgrade reflects structural improvement in Alpha’s profitability, which will drive further organic capital generation and result in stronger capital ratios. The upgrade also reflects the continued downward trajectory in the bank’s non-performing exposure (NPE) ratio, stable funding and improved access to the wholesale debt market to meet minimum requirements for own funds and eligible liabilities (MREL).

Original Story: Greek City Times | Athens 
Photo: Photo by Toomas Järvet in FreeImages
Edition: Prime Yield

Bain Capital, throughout its Special Situations arm, secured a €500 million leasing portfolio from Greece’s Piraeus bank. The acquisition has made via shares of Piraeus Bank subsidiary.

Bain Capital has acquired 100% of Sunshine Leases, a Greek financial leasing subsidiary of Piraeus Bank, including a portfolio of non-performing exposures from Greek leasing company HCL.

Original Story: PropertyEU |Branisçav Pekik
Photo: Bain Capital
Edition: Prime Yield

Piraeus Bank’s market cap is now around €4bn, compared with €1bn just a year ago. CEO Christos Megalou says he is determined to do everything in his power to ensure it stays there. Anita Hawser reports.When Christos Megalou became CEO of Piraeus Bank in 2017, the nonperforming loans (NPLs) accounted for 54% of the bank’s loan book. 

It was familiar territory for the former investment banker who spearheaded the restructuring and recapitalisation of Piraeus’s competitor Eurobank in 2013 following the Greek sovereign debt crisis.

“That was a big challenge,” says Mr Megalou, referring to his recapitalisation of Eurobank worth around €3bn. “But it went well. So after Eurobank I left Greece and returned in 2017, when I was offered to head up Piraeus Bank, which had NPLs somewhere in the region of €35bn. That’s a big number. And it’s only through a lot of hard team work over the past six years [that] we’ve reduced this number to €2.5bn. It’s now about 6% of our [loan] book, and by the end of the year we hope to get it down to about 4%.”

Understanding the magnitude of the problem

“Our capitalisation is now around €4bn, from €1.1bn a year ago. But deep inside I’m an investment banker [he held senior positions at Credit Suisse Investment Banking for more than 20 years in London], and I know whatever goes up, goes down as well. I try to do everything I can so that it will stay up there.”

So how did Piraeus Bank go from problem child to star pupil? Mr Megalou attributes the bank’s turnaround to a combination of factors. “We started by understanding the magnitude of the problem and how to manage it. As part of this exercise we did the first sale of NPLs in Greece using real estate as collateral. We called it Project Amoeba because it was the first time a Greek bank sold secured NPLs.”

“We sold these loans in October 2018 to Bain Capital, and it was daring enough to buy the NPLs at 30 cents on the euro. A lot of people thought that was a good price because before that UniCredit had done a much bigger transaction, which got around 12 to 15 cents on the euro. 

“Ours was a much smaller transaction – €1.5bn out of €35bn – but we still managed to get 30 cents on the euro, which was important as we proved to the market there were investors out there willing to buy non-performing exposures out of Greece using real estate as collateral.”

After that landmark sale to Bain Capital, Mr Megalou says the bank saw growing interest from firms looking to manage what was, at the time, Greece’s biggest portfolio of NPLs. “We had interest from Cerberus and Intrum from Sweden. We ended up going with Intrum, which is the biggest servicer of NPLs in Europe. It bought our non-performing exposures management unit, which we carved out from the bank with 1200 people attached to it. We sold that to Intrum for €440m of equity. It’s now managing it through an entity called Intrum Hellas where we are a 20% shareholder and Intrum owns 80%.”

The €400m it raised from the sale of the NPLs management unit to Intrum gave Piraeus the opportunity to claim another first for the bank and Greece: a €400m subordinated bond sale in 2019. “At that point in time, the bank could not raise equity,” says Mr Megalou. “That was very clear for us. In February 2020, we did a second tier-two bond for €500m with a rate of 5.5%. That gave us the opportunity to start cleaning up the bank.”

Then, Piraeus Bank went on to do an equity raise worth €1.4bn in 2021. Before that, it had exited six countries in southern Europe and the Balkans. The exit plan was part of a restructuring plan agreed with the European Commission’s Competition Authorities and included the sale of Piraeus’ subsidiaries in Serbia, Romania, Albania and Bulgaria. “As part of the restructuring plan, we agreed to eliminate foreign competition because, before I joined, the bank received state aid and one of the conditions of that aid was that we were obliged to get out of competing with European banks in other jurisdictions,” explains Mr Megalou.

The year 2022 saw Piraeus Bank return to profitability. In this year’s Top 1000 World Banks, Piraeus Financial Holdings actually topped the table of the biggest movers from loss to profit. “In 2023, we’re running at something north of 12% return of tangible book value” says Mr Megalou. “All this is anchored on a very efficient and effective retail network and a solid deposit-gathering machine. Right now, we have about €58bn of deposits, which is one of the highest numbers ever for the bank.”

Original Story: The Banker | Anita Hawser 
Photo: Piraeus Bank website
Edition: Prime Yield

Alpha Bank ACBr.AT, one of Greece’s four largest lenders, said on Monday it signed a binding agreement to sell a 1.5 billion euro ($1.62 billion) portfolio of bad loans to Hoist Finance AB.

The transaction, named Project Cell, is expected to reduce Alpha Bank’s non-performing exposures (NPE) ratio by 20 basis points, it said.

The deal is expected to be completed in the last quarter of the year.

Original Story: Reuters | Leferis Papadimas 
Photo: Alpha Bank website
Edition: Prime Yield

The “big four” Greek banks – Alpha, Eurobank, National and Piraeus – posted impressive first-half results, analysts say, focusing on their strong profitability and its main underlying cause, interest and commission fees, but also the quality of their assets and their liquidity, which led all to adjust their end-year goals upward.

NBG Securities notes that banks had a very strong second quarter, with improving trends in pre-provision income. This reflects interest rate hikes by the European Central Bank, the expanded loan portfolio, with new disbursements totaling €8.8 billion, and the improvement in operating expenses resulting from successful containment of costs. The higher turnover helped with the rising commission fees. Also, continuing offloading of nonperforming loans to funds enhanced the quality of their portfolio. Liquidity stayed high, as well.

Optima Bank notes that second-quarter results outperformed its own, and the wider market’s, expectations, as profits were higher than expected and writeoffs of bad loans lower. Also, all four banks’ capital positions were strengthened and liquidity was plentiful, Optima notes.

Specifically, combined net profit rose 31% quarter-on-quarter to €1.03 billion and average Tier 1 capital, which acts as a cushion in the event of a financial crisis, increased by 0.7% to 14.7%.

Net interest income rose 8% in the second quarter to €2.02 billion and income from commissions was up 11% to €471 million. Non-core income was €112 million or just 4% of total income. Total income rose 10% quarter-on-quarter to €2.37 billion.

Provisions for the impact of nonperforming loans rose 67%, but this was heavily affected by Piraeus’ restructuring of the nonperforming part of its own portfolio that cost €498 million, with average cost of risk rising to 0.84% from 0.76% in the first quarter of 2023. Nonperforming exposures fell by €256 million to €9.06 billion, with net nonperforming exposures at €3.68 billion.

As Alpha Bank CEO Vasilios Psaltis noted, “top-line growth continues to dominate the picture as tailwinds from higher rates are further strengthened by our active commercial policy.” 

Original Story: Kathimerini | Eleftheria Kourtali
Photo: Eurobank website
Edition: Prime Yield

More positive reports on Greek banks have come out from Canadian ratings agency DBRS and US financial services company Jefferies Group. 

DBRS notes that improvements in operational results and a better risk profile support a further strengthening of the banks’ capitalization. But it also expects a slowdown in net income from interest rates. 

Jefferies notes that rising rates and strong economic activity have boosted the sector. 

It also estimates that investors will henceforth focus on each bank’s ability to further clean up non-performing assets and to keep rising central bank interest rates from affecting its own rates structure.

Original Story: Kathimerini | Newsroom 
Photo: Photo by Jonte Remos in FreeImages
Edition: Prime Yield

Law firm White & Case LLP has advised Intrum Holding AB (Intrum) on a securitisation involving Piraeus Bank’s Project Senna non-performing loan portfolio.

“Intrum and Piraeus Bank have already closed seven other securitisations as part of their successful strategic partnership, now totaling more than €17 billion gross book value,” said White & Case partner Dennis Heuer, who co-led the Firm’s deal team.

The Project Senna portfolio consists of loans with a total gross book value of €300 million at March 31, 2023. It is held by Senna NPL Finance DAC and consists of approximately 60% small-sized mortgages, and 40% consumer and small business loans. 

Piraeus and Intrum have agreed that Intrum Hellas will act as servicer of the Project Senna portfolio, and Intrum has agreed to acquire the entirety of the notes of the securitisation from Piraeus.

Original Story: White & Case | Press Release 
Photo: Piraeus Bank
Edition: Prime Yield

The persistence of inflationary pressures and geopolitical tensions, the risk of a sharp repricing of assets in international money and capital markets, as well as the recent turmoil in the US and Swiss banking systems, have considerably heightened risks to financial stability, the Bank of Greece (BoG) said in its Financial Stability Review released on Thursday.

The central bank noted that the Greek banking sector is now clearly better placed than in the past to absorb international market shocks, while the implementation of banks’ strategies for resolving the legacy stock of nonperforming loans helped all four systemic Greek banks to achieve a single‑digit NPL ratio.

The banking sector’s capital adequacy improved further to a satisfactory level, above the regulatory minimum, as banks posted profits after two loss‑making years, BoG said, adding that the liquidity of the sector improved, as a result of increased customer deposits and despite voluntary partial repayments of funds raised through the European Central Bank.

The NPL ratio has declined (to 8.7% in December 2022), although it remains significantly above the corresponding European average.

Therefore, banks should step up their efforts to achieve further convergence, BoG said.

Moreover, inflation and a slowdown in economic activity might affect the financial condition of non‑financial corporations and households, leading to a new wave of NPLs.

Original Story: Ekathimerini | Newsroom
Photo: Photo by Toomas Järvet in FreeImages
Edition: Prime Yield

Following the initial announcement of early May, Alpha Bank, trough the affiliate companies Alpha services and Holdings SA, has just completed the disposal of the Hermes portfolio, a mixed pool of secured Non-Performing Loans to Greek Large Corporate Entities and Small and Medium-sized Enterprises. This NPL portfolio has a total on-balance sheet gross book value of approximately 650 million euro. 

The operation is divided into tranches. 

“Hermes Tranche A Portfolio” comprises a total on-balance sheet gross book of 240 million euros, sold to Saturn Financial Investor DAC and Pluto Financial Investor DAC, entities financed by funds managed by affiliates of Fortress Credit Corp. 

The “Hermes Tranche B Portfolio” was acquired by Hermes Acquisitions B Designated Activity Company, an entity financed by funds managed by affiliates of Davidson Kempner Capital Management and funds managed by affiliates of Fortress Credit Corp. This comprises a pool of a total on-balance sheet gross book value of 410 million euros.

Original Story: Alpha Holdings Press Release
Photo: Site Alpha Bank
Edition: Prime Yield

All categories of new loans, especially business loans, saw an increase in interest rates of up to 0.50% in January, in contrast to deposit rates, where the increases are only up to 0.13%. This trend pushed the spread between new loan and deposit rates to 5.24% and 5.22% for existing balances, from 4.96% and 4.93% respectively in December.

The average increase in new loans is, according to Bank of Greece data, at 30 basis points (at 29 basis points for existing loan balances) and makes the cost of new borrowing as well as the servicing cost for existing loans extremely expensive in the country, burdening family budgets as well as the financing needs of businesses.

The increase is a result of the rise in interest rates by the European Central Bank, which drags the Euribor up as well. It should be noted that the data for January do not fully reflect the upward trend in interest rates, after the last increase decided by the ECB in February, but they do monitor the course of the 3-month Euribor, which, based on the latest data, has risen to 2.8%.

The ECB has already discounted a rise in the key interest rate by 50 basis points and, according to estimates, the 3-month Euribor will stabilize at 4% by the end of the year, while the start of the de-escalation process is not expected before the middle of 2024.

BoG data on interest rate developments for new loans in January 2023 show that business loans have been the hardest hit, rising by up to 50 basis points, with a focus on lending rates for microbusinesses and specifically for loans up to 250,000 euros, which have increased to 6.34%, but also for loans from €250,000 to €1 million, which have increased to 5.63%.

The average cost of financing large companies – i.e. for loans over €1 million – is also high, having increased to 4.85% from 4.49% in December, while the average cost of business loans has climbed to 7.20% from 7.06% in December. 

Original Story: Kathimerini | Evegenia Tzortzi 
Photo: Photo by Svilen Milev from FreeImages
Edition: Prime Yield

The Public Employment Service (DYPA) is expected to issue a public invitation to banks in order to pave the way, toward the end of March, for the granting of at least 10,000 low-interest mortgage loans to young people aged 24 to 39.

Young citizens with an income of between €10,000 and €16,000 per year or couples with a joint income of up to €24,000, plus €3,000 for each child, have the right to participate in the housing program.

According to the joint ministerial decision published in the Government Gazette, the loan is 75% financed by DYPA with no interest due on this section of the loan, while the remaining 25% is granted by the banks. This means that three quarters of the loan is interest-free, so that the final interest rate that the borrower pays for the entire amount is a quarter of the cost of a normal mortgage.

Therefore, in practice, to obtain a loan of €150,000 (which is also the maximum allowable limit) in order to buy a property worth €200,000, instead of an interest rate of 4.7% for 30 years, the beneficiary of the program will pay an interest rate of 1.17%. If it concerns a couple with three children, and with at least one of the two adults under the age of 39, the interest rate will be zero, as the loan will be fully covered by DYPA.

The houses for which young people will be able to get a mortgage loan must be over 15 years old, with a building permit issued up until 2007, and not exceed 150 sqm.

Before a loan’s disbursement, the bank is obliged to inform the Hellenic Development Bank and DYPA about the check it has carried out on the beneficiary’s eligibility and the property to be acquired.

In the event of a delay in paying an installment of more than 30 days, the bank will classify the borrower as non-cooperative, and if they do not pay after 90 days of continuous arrears, the bank can terminate the contract.

Original Story: Kathimerini |Roula Salourou 
Photo: Photo by Matthew Bowden in FreeImages
Edition: Prime Yield