Eurobank has become the first Greek lender to make use of the government’s Hercules scheme to reduce nonperforming loans after gaining finance ministry approval for state guarantees on senior tranches of its Cairo I and II debt securitisations.
Greek banks have been working to reduce €75 bn of bad loans that resulted from the last financial crisis, which shrank the country’s economy by a quarter.
The Cairo programme consists of three securitisations that together amount to €7.5 bn and will help Eurobank to reduce its ratio of so-called non-performing exposures (NPEs) to 15% in the first quarter.
Shedding the bad debt is crucial for Greek banks’ ability to lend and shore up profits. The Hercules scheme (HAPS) was put in place to help the banks to offload up to €30 bn in bad loans.
The Greek state’s guarantee on the senior notes amounts to about €2.4 bn.
Original Story: Ekathimerini | News/ Reuters
Photo: Eurobank website
Edition: Prime Yield