NBG, Piraeus to give investors clear picture of bad loans

Greek systemic banks are considering the creation of their own so-called bad banks that would absorb all the problematic elements of their portfolios – mainly bad loans – in order to achieve the more efficient management of delayed repayments. Their objective would be to separate nonperforming loans (NPLs) from the banks’ main portfolios.

The deputy chief executive officer of National Bank, Petros Christodoulou, told Reuters on Thursday that the group is examining the creation of a bad bank in the next couple of months, and is about to hire consultants to that end.

The Piraeus Group also has the creation of a bad bank in its sights, stated Anthimos Thomopoulos, its deputy CEO, who told Reuters that the group is examining ways to split the NPLs from the healthy portfolio and forecast that the new structure will apply from the first quarter of 2014. Thomopoulos added that the market requires clarity as far as the course and the returns of performing and nonperforming loans are concerned.

Senior Piraeus Group officials told Kathimerini that the creation of the bad bank will follow the pattern set by Citigroup, where the bad bank created had NPLs burden the group and not the lender itself, allowing investors to have a clear picture of the bank’s problematic part.

It is in that context that National and Piraeus are considering the creation of independent units, which will be staffed by specialized personnel. The possibility of cooperation with foreign partners is also being examined. The bad banks’ target will be to collect as many funds as possible from the utilization and sale of problematic elements.

Regarding the size of the bad elements to be transferred to NBG’s new entity, Christodoulou said the group is still in the planning stage and that no such decision has been made yet.

The Piraeus Group is considering the transformation of its subsidiary Geniki into a specialized investment bank that will undertake the management of NPLs and other problematic elements of the group, as well as the restructuring of enterprises that are facing viability issues, so as to help them return to growth.

Alongside the creation of its own bad bank, NBG has gathered NPLs of small and medium-sized enterprises amounting to 1 billion euros which it will transfer into a special entity with the aim of selling a minority stake to private investors. Talks are already under way with investors for the sale of a stake, Christodoulou confirmed.

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