Header image

Greek banks accelerate reduction of non-performing exposure

Analysis of recent NPL activity by banks in Greece.

Last month, Greece completed its international bailout program and the country’s banks have done their homework by cutting their Non-Performing Exposure (NPE) volumes. Last week, Piraeus Bank, National Bank of Greece, Alpha Bank, and Eurobank Ergasias showed how much progress they had made in their 1H18 earnings reports.

NPEs were down EUR 14.8bn, or 14%, from their peak in March 2016. At the end of March, Greek banks were still sitting on a total EUR 92.4bn of NPEs, reflecting an NPE ratio of 48.5%, according to data from the Bank of Greece published on 6 June. However, the banks’ earnings results showed that they are tackling their NPEs quicker.

The four major banks and the smaller Attica Bank, which is due to publish its results for the first half of the year on 27 September, have between them completed five deals with a total gross book value of EUR 6.5bn, and EUR 13.8bn in legal claims. At least another eight deals with a combined value of EUR 7.5bn are in the pipeline.

Compare this with last year, when there were just two deals – Eurobank’s sale to Intrum of a EUR 1.5bn unsecured NPL portfolio of total unpaid principal of which circa EUR 620m on its balance sheet, and Attica Bank’s securitisation of a EUR 1.3bn portfolio.

Piraeus Bank announced two new sales to be completed by the end 1H19, totalling EUR 800m. Project Nemo consists of EUR 400m secured shipping loans and Project Iris comprises EUR 400m of unsecured personal loans and credit cards, small business loans, and leasing exposures

Piraeus’s fresh sales follow the first SME-secured portfolio sale in Greece – the EUR 1.4bn Project Amoeba portfolio to Bain Capital Credit, and the EUR 400m Project Arctos to APS Investments Capital.

The bank reduced its NPE by EUR 5.1bn in a year, bringing it down to EUR 29.4bn with an NPE ratio of 54.7% at the end of 2Q18. This year alone, it has cut its NPE exposure by EUR 3.5bn.

Another active NPL seller has been Alpha Bank. The bank is close to selling its first secured portfolio, the circa EUR 1bn Project Jupiter. It has selected Apollo Global Management, Fortress Investment Group, Lone Star Funds, Pimco, and Centerbridge Partners to present binding offers for the portfolio, PropertyEU reported.

Alpha Bank is also working on EUR 900m Project Mercury, consisting of unsecured consumer and small business NPLs.

Earlier this year, the bank sold the EUR 2bn Project Venus loan portfolio to B2 Holding, as reported. Its non-performing exposure in Greece fell by EUR 2.4bn year-on-year, bringing the total down to EUR 24.6bn at the end of 2Q18. The NPE ratio in June 2018 stood at 51.9%, with an NPL ratio at 35.6% from 35.2% in the previous quarter.

National Bank of Greece has launched the sale of its first SBL/SME secured NPE portfolio with a value of EUR 1bn and has scheduled the sale of a EUR 700m credit card and consumer loan portfolio.

Earlier this year, it completed a EUR 2bn NPL disposal of unsecured retail NPLs, dubbed Project Earth, to Intrum and CarVal, as reported.

The banks’ NPE volume was EUR 16.3bn at the end of the 1H18, with an NPE ratio in Greece of 42.6%.

Of Greece’s four main banks, only Eurobank Ergasias has not completed a deal this year. However, it is working on the EUR 1.1bn unsecured portfolio of consumer loans, Project Zenith, as reported. It also announced it is in advanced discussion with SSM regarding a EUR 2bn mortgage loan book securitization, which is targeted for 2019.

Eurobank‘s NPE stood at EUR 17.3bn at the end of the second quarter, down from EUR 17.8bn in the previous quarter and from EUR 20.4bn a year ago. The NPE ratio decreased by 110 basis points quarter-on-quarter to 40.7% of total loans.

A smaller Greek bank, Attica Bank, will announce its result later this month, but it recently announced its second EUR 700.5m NPL securitisation. Pimco and Qualco have agreed to acquire the Junior Note of a nominal value of EUR 357.25m issued by the securitization of the transferred portfolio for an amount of EUR 47m, and to manage the entire portfolio of Attica Bank.

At the end of 1Q18, the bank’s gross loans amounted to EUR 2.7bn with an NPE ratio of 38%.

Aside from sales, the banks have explored different ways to manage the bad loans. On 31 July, Alpha Bank, National Bank of Greece, Eurobank and Piraeus entered into a servicing agreement with doBank for the management of common NPEs of more than 300 Greek SMEs totalling around EUR 1.8bn.

Alessia Pirolo Head of NPL Coverage Debtwire

Alessia Pirolo is Head of NPL Coverage at Debtwire ABS. From a previous focus on Southern European Commercial Real Estate, she is now in charge to expand Debtwire's NPL coverage areas around the world. Before joining Debtwire, she covered U.S. and European commercial real estate for The Wall Street Journal, and the Commercial Observer. She holds a master’s degree from the Columbia University Graduate School of Journalism.

Alessia Pirolo Head of NPL Coverage Debtwire

Alessia Pirolo is Head of NPL Coverage at Debtwire ABS. From a previous focus on Southern European Commercial Real Estate, she is now in charge to expand Debtwire's NPL coverage areas around the world. Before joining Debtwire, she covered U.S. and European commercial real estate for The Wall Street Journal, and the Commercial Observer. She holds a master’s degree from the Columbia University Graduate School of Journalism.

Join My Debtwire Events

Get exclusive content from our leading fixed income events.

Watch sessions again, download presentations and get exclusive interviews.

Connect with an international community of fixed income professionals via our event networking app (for attendees only).

Sign-up to My Debtwire Events to join the community.

Sign Up

Read Privacy Policy

Debtwire Events
Debtwire transformed the market and quickly became the leading provider of expert news, data and analysis on global leveraged credit. With global breadth and local depth, our end-to-end coverage goes behind the scenes from primary issuance to the first sign of stress through restructuring and beyond. Subscribers trust Debtwire – the pioneer in the industry – for comprehensive coverage across geographies, companies and asset classes. Backed by Debtwire’s team of experts and award-winning content, our events offer attendees an unrivaled perspective.