By George Georgiopoulos
ATHENS (Reuters) – Piraeus Bank, Greece’s largest lender by assets, is close to clinching a deal to sell 400 million euros (351.4 million pounds) of soured, unsecured consumer loans as part of efforts to shrink its bad-debt load, bankers close to the deal told Reuters.
The project, dubbed Arctos, involves a pool of about 220,000 non-performing credit card and consumer loans with a gross book value of 400 million euros on the bank’s books. Nearly half of the loans are in the 1,000-5,000 euro range.
“Negotiations are in the final phase with three shortlisted buyers – APS Holdings, Intrum and EOS,” one of the bankers said, declining to be named.
Piraeus Bank declined to comment. APS, EOS and Intrum were not immediately available to comment.
Greek banks have been under pressure from regulators to tackle their soured loans which are clogging up their balance sheets and holding back lending.
The total of non-performing exposures (NPEs), which include credit past due for more than 90 days (NPLs) plus restructured loans likely to turn sour, amounted to 92.4 billion euros at end-March or 48.5 percent of their total loans.
Banks have agreed with regulators to reduce their mountain of non-performing credit to 64.6 billion euros by the end of 2019.
Piraeus, saddled with 30.8 billion euros of these bad loans, is working on shrinking its stock of soured debt by 34 percent to 20.3 billion euros by the end of next year.
One of the potential buyers, Swedish credit management company Intrum <INTRUM.ST>, was involved in a similar deal last year, acquiring a pool of unsecured, non-performing consumer loans from Greek lender Eurobank <EURBr.AT>.
The price tag on that deal was about 3 percent of the face value of the loans. [nL8N1MG1JR]
“The range of offers to buy the Arctos portfolio is expected around 4.5 to 5.5 percent of the principal of the loans,” the other banker said. “The deal will be capital accretive for Piraeus.”
That would mean the bank will likely chalk up some profit on the deal as it has already fully provisioned for losses on these loans.
Ernst and Young is advising Piraeus on the sale.
Active in distressed debt markets, APS Holdings has been buying, servicing and advising on NPL portfolios since 2004. EOS Group specialises in receivables management and debt collection.
Last month, Piraeus, which is 26.2 percent owned by Greece’s bank rescue fund HFSF, clinched a similar deal, agreeing to unload a 1.45 billion euro portfolio of secured, non-performing business loans to Bain Capital. [nL5N1T01ZO]
That sale, dubbed the Amoebaproject, fetched 432 million euros. Piraeus, which was advised by UBS on the transaction, said the deal boosted its equity capital by 20 basis points.
Bain Capital Credit is a credit specialist with about $37 billion in assets under management, investing across credit strategies, including leveraged loans, high-yield bonds, distressed debt and non-performing loans.
(Reporting by George Georgiopoulos. Editing by Jane Merriman)