Greece’s Alpha Bank said on Tuesday it will acquire full ownership of loan servicing company Cepal as part of plans to speed up offloading 10 billion euros ($11.2 billion) of bad debt to clean up its balance sheet.
Greece’s fourth largest lender, which owns 40 percent of Cepal, said it will buy the remaining 60 percent from Centerbridge in July. It then plans to sell all of Cepal to international investors, with a view to creating the largest independent loan servicing company in the Greek market, it said.
Loan servicing companies collect payments on a loan and provide other services related to maintaining loans.
Alpha’s bad loan portfolio that it wants to offload, known as Galaxy, consists of retail loans worth 7.6 billion euros plus loans to medium-sized and large corporate clients worth 3 billion euros.
Offloading the Galaxy portfolio is a key pillar of Alpha’s strategy to improve asset quality and restore profitability.
The bank is already in talks with at least five U.S. investment firms including Cerberus and PIMCO in a fresh attempt to offload it.
Alpha launched the offloading of Galaxy, including the sale of Cepal, early this year but halted negotiations as the coronavirus crisis struck. Apart from Galaxy, Alpha has about another 8 billion euros of bad debt in Greece.
The sale of Galaxy will involve a securitisation.
Alpha said Richard Langstaff, Cepal’s founder and chief executive will step down effective July 1. Theodore Athanassopoulos, currently Alpha Bank’s executive general manager in charge of wholesale non-performing exposures (NPEs), will become Cepal’s new CEO.
Artemis Theodoridis, currently Alpha Bank’s general manager for NPE management and Treasury, will become Cepal’s executive chairman.