Bad-loan portfolios being sold at huge discounts


The prices of the loan portfolios that Greek banks are selling to foreign funds are below 5 percent of the nominal value of the loans they contain, as they are unsecured, have not been serviced for a long time and are usually flagged as bad by the banks.

A few days ago Alpha Bank sold a nonperforming loan portfolio with a nominal value of 3.7 billion euros for just 90 million euros to Norwegian group B2Holding, which beat off competition from Czech group APS. The price amounts to just 2.4 percent of the value of the portfolio (including interest), or 4.5 percent of the loans’ original value of 2 billion euros.

The price at which the Venus portfolio was sold by Alpha is marginally higher than that of Eurobank’s Eclipse package, whose original value (not including interest) was 1.5 billion euros (with interest it was 2.8 billion); it was sold at the end of 2017 for just 45 million euros.

The Venus package included 315,000 loans of 180,000 debtors that have been delayed by an average of seven-and-a-half years. They are unsecured loans, consisting of 65 percent consumer loans, 8 percent credit card debts and 27 percent small corporate loans. Alpha announced that the transaction will be completed within this month and will have a positive effect on the bank’s financial results, capital and cash flow.

The lenders’ mass sales are the result of pressure for the front-heavy reduction of NPLs through sales and actions from this year. According to the Greek banks’ commitments to the European Central Bank’s Single Supervisory Mechanism (SSM), bad loans amounting to 11.5 billion euros have to be sold by the end of next year, but the target is should be reached at the end of 2018.

After Eurobank and Alpha, National Bank will follow with the sale of the Earth package, originally worth 5.2 billion euros: The virtual data room process opened on Thursday, and the portfolio includes 300,000 loans held by 200,000 borrowers.

Piraeus Bank’s effort to sell the Arctos portfolio, with an original value of 2.3 billion euros, is also in full swing. The nonbinding bids for the package were submitted this week.