Piræus Bank, one of Greece’s largest lenders, set up and agreement with Swedish loan servicer Intrum to manage its non-performing assets (NPA), creating thus the biggest independent loan servicer in the Greece market, according to executives from both firms.
Being Greece’s largest lender by assets, this deal with Intrum is part of Piraeus efforts to reduce its risk exposition from bad debt.
«The deal is the biggest foreign direct investment by a Swedish company in the Greek financial sector, » Christos Megalou, CEO of Piraeus Bank told reporters. «We have created the first independent servicer of size in the Greek market. »
The transaction valued the new loan servicing platform at €410 million with Intrum acquiring 80% of the new company for €328 million. The remaining 20% will be held by Piraeus Bank. The non-performing credit will stay on Piraeus Bank’s balance sheet.
Intrum Hellas is already up and running, managing Piraeus Bank’s €26 billion of non-performing exposure (NPEs). In comparison, the 18 licensed credit servicers in Greece were servicing a total of €17.5 billion euros of NPL as of June this year. About 1,000 employees of Piraeus have moved to the new company.
The new company hopes to take up the loan servicing of third parties as well. Executives said there was about €10 billion of NPL that have been bought by specialist funds which are looking for independent loan servicers.
Intrum, with a current market value of about €3.5 billion, operates in 24 European countries, employing 10,000 people. It did a similar deal with Italy’s Intesa Sanpaolo in December last year.
«It is our market entry into Greece, we hope to offer our value proposition to other institutions as well. We are here to stay, » said Intrum’s CEO Mikael Ericson. «We seek the right balance between amicable and legal collection. »
Greek banks have been working to reduce a pile of sour credit, about €75.4 billion at the end of June, the legacy of a financial crisis that shrank the country’s economy by a quarter.
Original Story: Reuters | Georgiopoulos
Photo: Piraeus Site
Edition: Prime Yield