NPL&REO News

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

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

Bain Capital raises €1.25 billion fund to purchase European Bank Loans

18 March, 2019

Bain Capital’s credit arm raised 1.25 billion euros for a new fund to purchase European bank loans, according to information given to Bloomberg by a person familiar with the matter.

Bain Capital Credit’s new Special Situations Europe fund will target banks’ secured debt, non-performing loan portfolios and real estate assets, said the person, who asked not to be named because the information isn’t public. The money raised for the fund, the first dedicated to European soured loans at Bain, exceeded an initial target of €1 billion, the person said.

Bloomberg contacted an external spokeswoman for Bain, who declined to comment on the matter.

Last year alone, Bain acquired nine bank loan portfolios across Europe, in Greece, Italy, Portugal and Spain, with a gross book value of more than €4 billion, revealed the same source. Bain Capital has $105 billion in asset under management, according to its website.

European lenders’ efforts to clean up their balance sheets since the global financial crisis have created a burgeoning market for trading non-performing loan exposures.

While more than a third below their peak, Italian lenders still had €222 euros of NPL on their books as of June, according to PricewaterhouseCoopers data. Greek lenders are also seeking to slash €89 billion of bad debt from their books, equivalent to about half of the country’s annual economic output.

Original Story:Bloomberg | Luca Casiraghi
Photo: Bain Capital
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

Greece: Political storm, NPLs delay issue

8 February, 2019

Greece’sFinance Ministry is putting off the issue of a five-year bond, which is all set-in technical terms, until the domestic political dust settles and the effort to reduce the credit sector’s bad-loan stock results in a breakthrough.

The anticipated conclusion of the parliamentary process over the Prespes agreement will remove one of the two main obstacles blocking Greece’s return to the money markets, but the issue of the nonperforming loans still needs to be resolved before a new bond issue.

The milestone that Finance Minister Euclid Tsakalotos has set for the process to start in the markets is the submission to the European Commission’s Directorate General for Competition (DG Comp) of the plan for the reduction of banks’ NPLs processed by the Hellenic Financial Stability Fund and presented by the minister to the creditors’ mission chiefs this week.

The government expects that to give the markets a strong signal that the process of bringing NPLs down to a more manageable level is under way.

The government hopes to have the plan submitted before the end of February, as Brussels’s approval will formally open the way for the implementation of the HFSF blueprint, granting political points to the ruling party ahead of the general election. As Fitch stressed this week, the NPL reduction plan could be a game changer for the sector, decisively helping toward the restoration of confidence.

The planning of the Public Debt Management Agency provides for the issue of a five-year paper whose value will not exceed 2-3 billion euros. Analysts estimate that the interest rate could come to 3.5-3.75%, noting the favourable climate in the markets that the government should make the most of.

As Swiss daily Neue Zuericher Zeitung noted, the hunt for yields has resumed internationally, and the next one to benefit from that could be Greece, following the recent issues by Italy, Ireland, Portugal and Spain. After all, the secondary market rate of Greece’s five-year bond has dropped to six-month lows in the last 10 days.

Original Story:Ekathimerini |Eleftheria Kourtali
Photo: FreeImages.com/Takis Kolokotronis
Edition:Prime Yield