NPL&REO News

NBG to securitise €3 billion of NPL by 2022

12 June, 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

Many Greeks still struggle to claw out from mountains of debt

12 June, 2019

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

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

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

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

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

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

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

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

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

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

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

Looks Ambitious

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

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

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

Distressed funds gobble up €20 billion in NPL

5 June, 2019

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

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

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

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

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

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

Greece’s top 3 banks put more than €6Bn in NPL for sale

31 May, 2019

The intentions of investment funds active in purchasing nonperforming loans (NPL) portfolios in Greece, having placed some 1.3 billion euros in the market to date, will be tested in 2019, as Alpha Bank, National and Piraeus are planning fresh sales adding up to more than 6 billion euros.

These intentions are not only related to the nature of the portfolios up for sale and whether the loans included are secured against properties, but also to the results secured from managing the portfolios already transferred and whether expectations of the recovery of part of those household and corporate debts are met.

Talks on bringing down NPL are restricted to the reduction banks will achieve in the context of their commitments to the monitoring authorities; however, the issue is much broader.

While Greek banks’ nonperforming exposures had declined by 25.4 billion euros from their peak of 107.2 billion in March 2016 to 81.8 billion by end-2018, the reduction of the stock of bad loans does not mean that the debts are now being serviced. On the contrary, that figure concerns loans that may have changed hands but remain in the economy, as the households and corporations responsible for them have yet to reach a settlement as to their repayment. This is what will determine the success or failure of the project to slash bad loans – not just the banks’ financial reports.

Market professionals explain that despite the portfolio transfers implemented in 2018 – a year of mass sales – the secondary market has yet to reach the same pace. In spite of investors’ keen interest in buying NPL portfolios, as well as the licensing to date of 17 management companies, the results have not been reflected in the figures and investors’ returns have yet to be measured.

The same sources say the delay there is predictable, given that the market requires at least 18 months to mature. Still, the long list of management companies licensed in the short period of less that two years has exceeded all expectations.

This glut also reflects reservations expressed by the market over the price levels in portfolio sales by Greek banks, which up until today have been the main tool employed to reduce NPEs. In the first year after the sales started at end-2017, the four systemic banks of Greece made eight transactions, while Attica Bank conducted another two.

More than half of the 1.3 billion euros invested by major funds (i.e., 769 million euros) went to pay for two sizable transactions concerning loans secured against realty. They were the Amoeba and Jupiter packages conceded by Piraeus and Alpha respectively – the former fetched revenues of 432 million euros and the latter 337 million. The prices achieved in those sales correspond to 33.5% and 29% respectively of the nominal value of the portfolios (the original capital without interest) and were perceived by the market as particularly high, raising expectations concerning secured loan sales.

The next crash test for secured loan sales will be the Symbol portfolio that National Bank is selling and which mainly comprises loans issued to very small enterprises. The nominal value of the portfolio amounts to 950 million euros and the binding offers tabled a few days ago will be assessed by the end of the month. The completion of the transaction and the price secured will indicate whether the NPL transfer market is displaying fatigue or not, and represent an evaluation of the recent framework for the protection of borrowers’ primary residence.

The next packages of secured loans will be put up for sale by Alpha Bank, which is planning the transfer of two such portfolios with a combined value of 3.8 billion euros. Piraeus is set to follow, and then National.

As bank officials explain, the key parameter for all such transactions is the accounting value based on which the bank has recorded each portfolio in its books; that usually incorporates the provisions made for the portfolio, which is why it is lower than the nominal value of the package.

The package sales will also see the entry of PQH, the single special administrator of the 17 banks that have been placed in receivership since the outbreak of the financial crisis, or in some cases earlier. PQH is starting with the sale of the first package of consumer loans worth 1.1 billion euros, but the target is much more ambitious and aims at the earliest possible clearance of the entire portfolio of 9 billion euros it has under its management.

The PQH bad loans include a big chunk of corporate debts that account for 50% of the company’s portfolio, with 70% of them secured against collateral. However, it is far from certain that this portfolio will attain the prices the banks’ packages have achieved, as there can be no comparison between two sets of different offerings.

The loans under PQH management are not just nonperforming, but have recorded very long delays, for many years, and most of the indebted enterprises are either not sustainable or do not exist at all anymore. A similar difficulty is recorded in the management of the now-defunct ATEbank’s portfolio due to its exposure to the agricultural sector, which renders collection particularly difficult.

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Piraeus site
Edition & Translation: Prime Yield

Greece has already sold 4,154 Golden Visas

16 May, 2019

Since beginning the sale of coveted “Golden Visas” that come with residency permits and European Union passports, Greece has peddled off 4,154 to wealthy foreigners while even members of the Diaspora often have to wait a year or longer for papers allowing them to live in the country.

That covered up to the end of March this year in a program where Greece – which has among the lowest eligibility limit – granted the visas to people investing at least €250,000 in property or other means.

Most of that has come in the purchase of apartments and homes for sale cheap during a nearly nine-year-long economic crisis, with many of them turned into short-term rentals like Airbnb, emptying whole neighborhoods in Athens of long-time residents and driving up rents to prohibitive limits.

The Golden Visa property purchasers don’t have to live in the units they buy and the Paris-based Organisation for Economic Co-operation and Development (OEC) said the schemes, that run in many European Union countries, are also being used by criminals to launder money and get passports allowing them to move freely around the bloc.

Visas can also be bought outright, with criticism there’s no vetting of applicants, by investing in Greek securities, such as shares of ATHEX-listed companies, Greek state bonds or with money deposited in Greek banks.

In 2018 alone, 1,399 such long-term residence permits were granted, the business newspaper Naftemporiki said in a report. Including dependents, the program numbers 11,445 people with Chinese nationals receiving 2,416 since the program began, followed by Russians and Turks.

Original Story: The National Herald
Photo: FreeImages.com/ Toomas Järvet
Edition:Prime Yield

Eurobank kicks off the sales of two REO portfolios

10 May, 2019

Themass sale of properties by banks is getting under way with Eurobank’s initiative for the concession of two major real estate owned (REO) portfolios with a gross nominal value of €120 million, ekathimerini.com reports.

Named “Opus” and “Star”, these portfolios contain residential andcommercial assets, and their progress will be the initial test for the market of major real estate managers.

“Opus” consists of 258 commercial assets with a gross value of €88 million euros, including offices, stores, industrial properties and warehouses, among others; of which 58% located in the Attica region. The bank has opened the data rooms for the package and nonbinding bids are expected by the end of the month.

“Star” consists of 685 properties, chiefly residential but also some that are commercial. Half of those assets are located on the Greek mainland outside the areas of Attica and Thessaloniki, and bids are expected by end-April.

Against the backdrop of a stable real estate market with some signs of price recovery, Eurobank’s move represents the first attempt at the mass liquidation of assets that are not associated with loans and are in the bank’s full ownership. It remains to be seen whether the fragmented Greek real estate market can attract the interest of major investment funds that might be interested in the group utilization of those assets mainly for tourism purposes through short-term rentals, the acquisition of the Golden Visa residence permit, or for use by students.

Eurobank’s initiative forms part of local banks’ efforts to rid themselves of the massive stock of properties in their ownership, and is an indispensable part of the plans for the reduction of nonperforming exposures submitted to the European Central Bank’s Single Supervisory Mechanism (SSM) through the next three years.

Original Story:Tornos News | News
Photo: Eurobank site
Edition: Prime Yield

Mortgage credit expected to rise by 30% this year

7 May, 2019

Greece’s mortgage credit market is expected to recovery along this year, after several year of very low levels of activity. The major banks forecast a 30% growth rate in the new credit concession in 2019.

This comes after a 20% rise in the demand of new mortgage last year, with banks granting €320 million to home purchase in 2018, a figure that compares with the €260 million in new mortgage credit granted in the previous year.

According to bank numbers, the average mortgage loan amounted to €70,000 euros last year, while new issues are now made on stricter terms than in the past. A necessary condition is the borrower’s participation in covering at least 25% of the cost of the property acquired. The borrower’s contribution largely dictates the interest rate level, ranging from 4% to 5.5% for the purchase of a house, while for repair loans that are not secured against the property the rate ranges between 7% to 8%..

The state subsidy program Saving at Home (Exoikonomisi Kat’ Oikon) provided a further boost to the housing loans market last year, as banks disbursed an additional €40 million through the scheme, raising the total amount of new loans in the housing sector to €360 million.

Naturally, these figures are nowhere near the past highs recorded in this market, when bank funding powered the economy. However, the return of the credit sector to funding residential property purchases is generating optimism regarding both the increase in bank activity and the strengthening of the credit sector’s interest revenues, which in recent years had been in constant decline.

This improvement comes in the context of the property market recovery during the last couple of years, which Moody’s said will continue for at least the next 12 to 18 months.

In 2018 house sale prices rose 1.5% y-o-y in Greece. This was attributed to the increased flow of foreign investment and the improving macroeconomic environments. Moody’s added that this is also positive for the valuation of Greek bonds, banks and loans secured against real estate. The rise in real estate values is also set to offer borrowers additional incentives to refinance their mortgage loans, Moody’s estimated.

Original Story:Tornos News
Photo: FreeImages.com/Jonte Remos
Edition:Prime Yield

Greek banks eliminate emergency borrowing from Bank of Greece

30 April, 2019

Greek banks’ full repayment of emergency liquidity assistance (ELA) drawn from the domestic central bank is credit positive as it reduces their funding costs, ratings agency Moody’s said in a credit outlook report.

Greek banks’ outstanding ELA balance was around €1.0 billion at the end of December, or about 0.4% of the banking system’s total assets, down sharply from a peak of €86.8 billion reached in June 2015 at the height of the debt crisis.

Deleveraging, coupled with the gradual return of deposits, helped banks improve their funding profile, allowing them to fully repay the emergency funds they borrowed from the Bank of Greece over the past three and half years.

«Without their dependence on ELA and given the sustainable improvement in liquidity conditions, Greek banks will likely attract greater interest from international unsecured bond investors,» Moody’s said.

It said Greek banks were also able to repay the ELA balance by increasing their interbank repo transactions as international banks’ appetite for Greek assets gradually increased over the last years.

The ELA repayment helps to strengthen depositors’ confidence in Greek banks, allowing them to attract more deposits. Between June 2015 and February 2019, private-sector deposits rose by about 8% as market sentiment, economic activity and employment began to improve.

More expensive than borrowing from the European Central Bank, the ELA’s full repayment helps lenders to diversify their funding mix.

«Greek banks started issuing covered bonds as an alternative source of funding to repay their ELA balance amid increased appetite among international investors for Greek banking risk,»the report said.

National Bank was the first of the large Greek banks to fully eliminate its ELA exposure in December 2017, followed by Piraeus Bank in July 2018.

Last month Alpha Bank told investors it had fully eliminated its ELA in February as did Eurobank. The two lenders were the last of Greece’s four big banks to fully eliminate their emergency borrowing from the Bank of Greece.

Much smaller Pancretan Cooperative Bank fully repaid its ELA exposure in August 2017, while Attica Bank repaid its exposure in the second half of March this year, Moody’s said

Original Story: Reuters | George Gerogiopoulos
Photo: Bank of Greece
Edition:Prime Yield

Profits fall sharply at Alpha and NPG on NPL reduction

24 April, 2019

Greek lenders Alpha Bank and National Bank reported a sharp fall in profit in the last quarter of 2018 as they focused on reducing their piles of bad loans.

Alpha, Greece’s fourth-largest lender by assets, reported a net loss from continuing operations of €0.4 million in the October to December period after a net profit of €41.1 million in the third quarter. The lender, which is 11% owned by the country’s bank rescue fund HFSF, attributed the loss to weaker trading gains and higher credit-loss provisions.

Net profit from continued operations at National Bank (NBG), the country’s second largest lender, shrank to €1 million from €8 million in the third quarter as trading losses weighed on its bottom line.

Greek banks are working to reduce their bad debts and meet targets on so-called nonperforming exposures (NPEs) agreed with European Central Bank regulators.

Alpha CEO Vassilis Psaltis said in a statement that reducing NPEs – which include nonperforming loans (NPL) and other credit likely to turn bad – and delivering competitive services were the bank’s priority.

The bank goal is to reduce its NPEs by €14.3 billion by 2021, he said. In the meanwhile, Alpha bank’s NPL ratio dropped to 33.5% of its loan book from 34.1% at the end of September, while provisions for impaired credit rose to €669 million from €296 million in the third quarter.

As for NBG’s, the NPE ratio fell to 40.9% from 42.2% in the third quarter and the lender aims to squeeze it to below 15% by 2021. CEO Paul Mylonas said in a statement that would mean an €11.5 billion reduction by the end of 2021, with €4.5 billion of that coming this year. He also described the new strategy for managing bad loans as front-loaded and more ambitions.

Original Story:Ekathimerini | Reuters
Photo: Alpha Bank
Edition:Prime Yield

Greek banks contemplate even more ambitious NPL reduction target

17 April, 2019

Continuing pressure by the Single Supervisory Mechanism (SSM) has reportedly reinvigorated Greece’s systemic banks’ efforts to reduce the Olympus-sized «mountain» of «bad debt» burdening their balance sheets, in the wake of the most recent ECB report showing Greece with the highest percentage of NPLs amongst all Eurozone member-states, naftemporiki.gr reports.

According to several sources quoted by “Naftemporiki”, new targets to reduce NPLs will be announced by the end of the month, with a comprehensive plan to again be handed to the SSM. The same reports point to even more «ambitious» targets for Greece’s thrice bailed-out systemic banks.

An addendum will also, according to reports, include new NPLs created after April 2018.

The previous target, which is far from being attained, called for a reduction of NPEs (non-performing exposures) of €50 billion by the end of 2021, bringing bad debt listed on banks’ balance sheets from €82 billion to €32 billion.

At the same time, bank officials in Athens have repeatedly noted that it is extremely difficult to exceed a rate of reducing NPLs by more than €3 billion every trimester.

Original Story: Tornos News
Photo: FreeImages.com/Takis Kolokotronis
Edition:Prime Yield

Greek NPLs at the focus of international investors

12 April, 2019

Greece is now firmly at the focus of international entities investing in nonperforming loans, despite the uncertainties within those funds on the future returns of such investments and their reservations about the country’s administrative environment.

According to a survey conducted by London-based multinational law firm Ashurst, almost half of the investors (46%) said it is possible they will invest in NPLs in Greece in the next couple of years. The country ranks second in investor preferences, behind Italy, in which 51% of survey respondents said they intend to invest.

Greece is also second in the share of investors who have already invested in Greece in the last two years – 39% against Italy’s 43%.

«Given that the Greek market remains at its formative stages, it’s notable that some 39% of investors report that they already invested in Greece. Appetite there remains high with almost half of investors stating that they are likely or more to invest there in the next two years. With 2018 seeing the first two major secured NPL transactions in Greece successfully conclude, the Greek legal and regulatory environment appears to be entering the new world of NPLs with a renewed sense of commitment», Ashurst partner Olga Galazoula.

The responsible also noted that «Greece’s economy remains susceptible to wider market shocks. The first half of 2019 will prove pivotal in assessing Greece’s prospects as a sustainable NPL market, with the country in pre-election mode. It also remains to be seen if the recently renewed calls for the establishment of an asset management company to deal with the systemic NPL issue bear fruit this time round».

Original Story: Ekathimerini | Eirini Chrysolora
Photo: FreeImages.com/ JonteRemos
Edition: Prime Yield

Greece’s lenders want home protection criteria shift

26 March, 2019

Greece’s creditors are insisting on a drastic reduction of the maximum property and income criteria for the protection of borrowers’ homes, or the exemption of corporate debts, before approving the Greek plan, sources have told Kathimerini.

The lenders are asking that the ceiling on bank deposits a debtor may have to be eligible for primary residence protection be dropped to €5,000, from the limit of €65,000 that the original draft agreement provided for. Similarly they want to see the property value limit reduced to €100,000 from the original €260,000.

The creditors’ demands were the main reason for the disagreement at Monday’s Eurogroup that led to the postponement of the disbursement of almost €1 billion to Athens, and to Finance Minister Euclid Tskalotos asking for more time so that the decisions can be made at the government level.

The objective of the creditors is to see the number of borrowers that qualify for the new protection system shrink further, as they consider the figure of 180,000 debtors that would be protected under Athens’s proposal and bank estimates to be particularly high. In the creditors’ view, the government will not only protect the financially weak but also some strategic defaulters, thereby strengthening the culture against repayment.

In Brussels and Frankfurt they believe you cannot have someone with € 30,000 in the bank – let alone €65,000 euros – claiming to be unable to pay a monthly tranche of €200 or €300 to spare his or her primary residence from foreclosure. That is why they are seeking a drop in the limit of bank deposits to €5,000, while the government has only consented to halving the limit of the original proposal – i.e. bringing it down to around € 32,500.

Original Story:Ekathimerini-com | Evgenia Tzorti
Photo: FreeImages.Com/Pierre Amerlynck
Edition:Prime Yield

IMF warns Greece for risks in the credit system

22 March, 2019

The International Monetary Fund (IMF) discerns risks in Greece’s credit system, according to the post-bailout surveillance report discussed at March 6^thExecutive Board meeting, according to Kathimerini.

This is an issue that the Fund has consistently referred to as it considers it of prime significance for the Greek economy. This time sources say the IMF does not directly raise the issue of recapitalization, as it has done in the past, but identifies serious dangers due to the high volume of nonperforming loans.

The Fund is also unhappy with the proposals for the reduction of nonperforming loans and the protection of borrowers’ primary residences that the government is discussing with the European institutions.

Original Story: Ekathimerini | Eirini Chrysolora
Photo: IMF
Edition:Prime Yield

Recovery in Greece’s housing sector gains momentum

21 March, 2019

The recovery om Greece’s housing market gained momentum over the last quarter of 2018, with prices rising 2.5% year-on-year, as shown by the latest data released by the Greek central bank.

Greek housing prices had declined by 42% since 2008’s peak data showed, suggesting that a recovering economy and growing interest might lift property prices further.

Apartment prices rose 2.5% in the fourth quarter compared with the same period in 2017, Bank of Greece data showed, with the recovery accelerating from a downwardly revised 2.1% increase in the third quarter of last year.

More specifically, prices rose by 4.2% year-on-year in Athens, where home-sharing platforms like Airbnb and a “golden visa” programme (a renewable five-year resident’s permit in return for a €250,000 investment in real estate) have grown very popular.

Prices had slid 1.0% in 2017 from a year earlier, taking the cumulative fall since 2008, when the country’s protracted recession began, to 42%.

«It (new data) is a further confirmation of the uptrend in market prices, with Athens starring after an increase of 4.2%», National Bank economist Nikos Magginas told Reuters.

«It’s the result of rising demand and a shrinking stock of available-for-sale residential real estate», he added.

A projected rise in real disposable income of about 2% this year, coupled with improving economic sentiment and nascent signs of a pick-up in demand for mortgage credit, should further boost real estate prices in 2019, Magginas said.

Property accounts for a large chunk of household wealth in Greece, which has one of the highest home ownership rates in Europe at 80%, versus a European Union average of 70%, according to the European Mortgage Federation.

Original Story: Reuters | George Georgipoulos
Photo: FreeImages.com/Toomas Järvet
Edition:Prime Yield

Intrum plans to reinforce investment in Greece’s NPL market

19 March, 2019

«A step toward the right direction to reduce the moral hazard in the country,» is how Intrum Justitia Group Chief Executive Mikael Ericson describes the agreement between the Greek government and the country’s banks concerning the amendment of the so-called Katseli law for the protection of debtors.

In an interview with Kathimerini, the head of one of the largest European nonperforming loan servicing companies says that the group’s plan in Greece is to be independent and to benefit both the lenders and borrowers, as the former will be getting paid for products and services they have sold, and the latter will recieve assistance to improve the state of their finances.

The responsible also revealed Intrum’s plans to reinforce its presence within the Greek market, after having acquired two large NPL portfolios. «We are considering a variety of options and more recently we have applied for a debt servicing license with the Bank of Greece», he said. Besides, «we are also looking at other alternatives, one potentially being to buy a licensed debt servicing platform, another to do a carve-out from a local bank, or even to build a platform of our own».

Original Story: Ekathimerini | Evgenia Tzortzi
Photo: Intrum
Edition:Prime Yield

Growing number of hedge funds are moving into shipping debt

18 March, 2019

There is a growing number of hedge funds moving into shipping debt, an asset class few have invested in before, looking to buy up loans and bonds as banks cut their exposure to the troubled sector, Reuters says.

World economy worries and cost pressures are dampening prospects for a proper recovery in many segments of the shipping sector that, as Reuters highlighted, has struggled with tough markets for a decade.

Meanwhile, European banks, particularly German lenders, are trying to offload distressed and performing loans to the industry which attracts high capital requirements.

And the European Central Bank’s banking supervisor has flagged troubled non-performing loans (NPL) in 2019 as «a concern for a significant number of euro area institutions».

Hedge funds clocked up hundreds of millions of dollars in losses from investments in mainly equities when the shipping industry first turned sour a decade ago – and have made limited forays for the most part since.

Last year some equity-focused funds bet on a recovery for the global shipping industry through the stock and futures markets, but many are now retrenching after heavy losses in the fourth quarter.

Debt-focused funds are hoping for more luck.

Hedge funds looking at distressed loans include York Capital Management and Cross Ocean Partners, the sources consulted by Reuters said.

One deal expected to generate hedge fund interest include a portfolio of distressed shipping loans that Greece’s Piraeus Bank is seeking to sell, finance sources said.

A source close to the Piraeus Bank deal said Reuters the portfolio of shipping loans, called Nemo, was made up of non-performing and performing loans with a nominal value of 500 million to 600 million euros. The source said a sale was expected to close in the second quarter of 2019, declining to provide any details on potential bidders.

Original Story: Reuters | Jonathan Saul, Maya Keidan
Photo: FreeImages.com/Magda S
Edition:Prime Yield

European Commission warns Italy, Cyprus and Greece over high debt and bad loans

7 March, 2019

Italy, Cyprus and Greece are all experiencing «excessive» imbalances in their economies because of high debt and the number of nonperforming loans on their bank balance sheets, the European Commission (EC) said last February 27^th.

Brussels issued the warning as part of its European Semester Winter Package, which scrutinizes the economies of EU countries. The package serves as a basis for further talks between Brussels and the bloc’s capitals about their reform targets and whether their spending plans respect EU rules.

According to this report, Bulgaria, France, Croatia, Germany, Ireland, the Netherlands, Romania, Portugal, Spain and Sweden are also experiencing some economic imbalances, albeit less serious than Cyprus, Greece and Italy.

Commission concerns about high public debt were the common theme in this package, amid consistent warning that the EU is facing an economic slowdown in the near future. Earlier, in February, the Commission downgraded its growth forecast for the single currency bloc in 2019 and 2020 thanks to global trade tensions and China’s slowing economy.

EC Vice President Valdis Dombrovskis said during a press conference in Brussels that it is «worrying» that countries with high government debt have «not used the good times» to decrease their public stockpiles and build fiscal buffers to defend against an economic downturn.

«The European economy is experiencing its seventh consecutive year of economic expansion. Yet growth is slowing down», he said.

Greek woes not over

The label «excessive» is a red flag for national economies that are vulnerable to economic and financial shocks. And Athens’ imbalances were expected to be labelled as «excessive» since Greece exited its €86 billion bailout program in August with a debt pile of around 180% of GDP.

«This should not surprise anyone», Finance Commissioner Pierre Moscovici said.

The EU’s executive arm nonetheless described Greece’s financial sector as «vulnerable» due to a «very large» stock of bad loans that its lenders hold. «More progress» is also needed in Cyprus, which is struggling with an excessive amount of bad loans in its banking sector.

Public debt is a heavy burden for several EU countries, such as Spain, Portugal, and France — although they managed to escape the “excessive” label.

Part of that has to do with the fact that Madrid has enjoyed “robust” economic growth and Lisbon has decreased its bad loans stockpile and government debt.

Original Story: Politico | Silvia Sciorilli Borrelli
Photo: FreeImages.com/Takis Kolokotronis
Translation and Edition: Prime Yield

Greek banks remain cautious about the securitization of NPL

6 March, 2019

Greek banks remain cautious about the two alternative proposals for the securitization of non-performing loans (NPLs) presented to them by the Hellenic Financial Stability Fund (HFSF) and the Bank of Greece. They expect to see details and want to know whether one or both of them obtain European Commission clearance, local bankers told a forum in Athens on Friday.

The Greek credit system has a large backlog of non-performing exposures, amounting to some €85 billion in end-September 2018, or about 45% of all loans.

To tackle this problem of the credit sector and the economy in general, the HFSF has proposed a plan providing for the creation of bonds out of restructured NPLs (so-called securitization) whose repayment will be guaranteed by the state in case borrowers are in distress even after the restructuring of the loans.

Simultaneously, the country’s central bank is tabling another plan for the creation of a special purpose vehicle to which a large part of the banks’ NPLs would be transferred along with the lenders’ deferred tax credits.

Speaking at an event on NPL investment held in Athens, Bank of Greece Deputy Governor John Mourmouras said the two plans complement each other, adding that «the securitization schemes are the silver bullet for the NPL problem» because «a more hands-on solution» is required.

Both plans will be voluntary, but banks remain reserved toward them at this stage. Spealing at the same event, Charoula Apalagaki, secretary general of the Hellenic Bank Association, stressed that «We have not yet received the final drafts of the plans, and you know the devil is in the detail. It is fine to have more tools, to give banks the option to use one or the other, but the plans have not matured yet and we have not yet received feedback from (the European Commission’s) Directorate-General for Competition», she said.

Theodore Athanassopoulos, Alpha Bank’s executive general manager for NPL wholesale, was also cautious about the securitization plans, stating that «different banks have different portfolios, and therefore different needs,» but added that «the Bank of Greece scheme has a great potential for sales of loans».

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

Piraeus Bank aims to reduce NPLs by €15 billion until 2021

4 March, 2019

Greek banks still have the highest NPL (non-performing loans) ratio across the euro zone at 44.8%, according to the most recent figures from the European Parliament. And because so, Christos Megalou, CEO of Piraeus Bank, calls on lenders to do more on reducing the country’s bad debt, despite all the significant steps already taken to bring down the level of NPLs.

In an interview to the US media CNBC, the responsible told «the four systemic banks have agreed among themselves to reduce the non-performing loans between now and 2021 by €50 billion. This is almost 28% of the GDP [gross domestic product] of this country. It is a significant percentage vis-à-vis the actual percentage being produced by this country. I would like to see this happening and I would be very happy if we are able to achieve these targets as we have set ourselves out to achieve».

In specific the case of Piraeus, one of Greece’s top banks, the aim is to reduce the NPLs by €15 billion until 2021. This after having reduced bad loans by €5 billion in 2018, the CEO said in Athens.

In the same occasion, the head of Piraeus Bank revealed that there has been strong interest from international funds in buying Greek NPLs. «We had situations where funds were competing and in the process of competition they had to pay a significant amount of money in due diligence to be able to bid for these assets. We are very happy as principal selling those loans of the level of competition and the level of activity we see in the NPL market. I would dare to say that one of the most interesting asset classes in Greece this days is the non-performing loans».

Greece put an end to nearly 10 years of financial help after it ended a third financial rescue in August and has vowed to stick to stringent fiscal targets in the coming years in exchange for some debt relief.

Original Story:CNBC | Silvia Amaro
Photo: Piraeus Bank
Edition:Prime Yield

IMF insists reduction of Greek bank’s NPL must be expedited

11 February, 2019

The International Monetary Fund (IMF) has just reiterated the need to undertake coordinated steps to expedite the reduction of nonperforming loans (NPLs) held by Greek banks.

Greece’s creditors have long cited NPLs as a major vulnerability of the Greek economy.

Speaking during a press briefing in Washington (USA9, IMF spokesman Gerry Rice sid that the organization’s executive board will in March discuss the report drafted by the IMF mission which recently visited Athens within the context of Greece’s post-bailout surveillance.

Original Story: Ekathimerini
Photo: FreeImages.com/Jonte Remos
Edition:Prime Yield