Piraeus Bank, Greece's largest bank by assets, aims to sell its Balkan businesses and certain other holdings and shrink its bad loans portfolio, its new chief executive told reporters on Wednesday, outlining the group's plans up to 2020.
"Our vision is to be the most credible bank in Greece," said CEO Christos Megalou, who took over in April.
"Our strategy plan makes sense and is not pie in the sky," Megalou, who was previously CEO of rival Eurobank, said. "Our goals are demanding but achievable."
Piraeus, which is 26.2 percent owned by Greece's bank rescue fund HFSF, is still struggling with problem loans after a deep recession in Greece pushed unemployment to record highs.
The bank plans to slim down by selling wholly-owned subsidiaries in Bulgaria, Romania, Serbia, Albania and the Ukraine as part of its "Agenda 2020" plan to reduce its foreign exposures.
The group also plans to divest other holdings, including a 40 percent stake in shipping company Hellenic Seaways and the bank's 33 percent stakes in fish farms Nireus Aquaculture and Selonda, Megalou said.
Piraeus, 67 percent owned by institutional investors, will create a separate division to be known as "Piraeus Legacy Unit," as part of efforts to clean up its balance sheet.
Piraeus Bank will remain as the "good bank" with risk-weighted assets of 28 billion euros and a 2 percent non-performing loans ratio, comprising corporate banking, retail operations and asset management. It will aim for a 1.1 percent return on assets.
The legacy unit, with risk-weighted assets of 25 billion euros and a 64 percent non-performing loan ratio, will include international and non-core banking operations earmarked for sale. It will aim to shrink its bad loans via sales and restructuring.
A mountain of non-performing exposures (NPEs), comprising non-performing loans (NPLs) and restructured loans likely to turn bad, is the biggest challenge facing Greek banks. The banks' stock of NPEs stands at about 58 percent of economic output.
Piraeus will seek to shrink its NPEs to below 20 billion euros by 2020 from 33.3 billion in the first quarter and its NPLs, loans past due more than 90 days, to around 8 billion euros from 23 billion at end-March.
Piraeus, with a current market value of 1.8 billion euros, also aims to pay back 2.0 billion euros of contingent convertible bonds (CoCos) to the HFSF rescue fund by 2020. The funds were injected into the bank a recapitalisation two years ago.
"By then we will have generated the cash and capital to fully pay back the bonds," Megalou said.
The group also aims to restore its access to wholesale funding markets and reduce borrowing from the Greek central bank's emergency liquidity assistance (ELA) down to zero by 2020 from 11 billion euros last year.