Eurobank, one of the four largest lenders in Greece, has signed an agreement with credit service provider doValue to sell part of the mezzanine and junior bonds to the amount of 5.2 billion euros in nonperforming loan portfolio securitization, it said on Monday.
Greek banks are cleaning their balance sheets of bad loans through direct sales and securitizations to hit single-digit NPL rates near the euro area average over the next year.
The portfolio of bad loans, called Project Mexico, has a gross book value of €3.2 billion and doValue will service the sour loans.
The transaction is expected to close by the end of December subject to certain conditions including the adoption of a ministerial resolution to include the Mexican securitization in the government’s Hercules II program to reduce bad loans.
The Mexican securitization distressed loans will be reclassified as “held for sale” in the third quarter, according to Eurobank.
The sale of the Mexico Notes and the write-off of the Mexico Loans will be completed in this year’s fourth quarter.
The transaction will not have a material impact on Eurobank’s regulatory capital ratios and its nonperforming exposures (NPE) ratio is expected to be 7.3%. [Reuters]