Greek Banks Turn Corner With Bad-Loan Sales

Greek banks, among Europe’s weakest, are getting rid of their bad loans at a healthy clip.

In spring, the pandemic interrupted plans among the country’s banks to shed loans still festering from the eurozone crisis a decade ago. But stimulus from central banks and governments globally has sent fresh cash into funds that buy non-performing loans, reinvigorating the efforts.

“Many of the investors are in the process of fund raising or have raised additional funds for what they see as a wave of opportunity,” said Alok Gahrotra, a partner in the portfolio lead advisory team at Deloitte that advises NPL buyers and sellers. “There’s a lot of dry powder to deploy.”

In late November, Alpha Bank , one of Greece’s four dominant lenders, said it was in the final stages of selling a €10.8 billion gross loan portfolio—the equivalent of $12 billion—along with its loan-servicing unit. The preferred bidder is U.S. investment firm Davidson Kempner Capital Management LP, which beat out Pacific Investment Management Co. and others for what would be the largest-ever NPL sale in the country. Two more big banks, National Bank of Greece and Piraeus Bank , each aim to sell around €7 billion in loans next year.

The three transactions will tap a new state-supported securitization program called Hercules, which was first used by Eurobank SA in June to dispose of €7.5 billion gross loans, “paving the way for its peers,” said Eurobank chief executive Fokion Karavias.

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Written by Chekmagazine


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