The European Bank for Reconstruction and Development, APS Delta, Balbec Capital and the IFC will jointly invest 50 million euros ($57 million) in a portfolio of unsecured sour loans originated by Greece’s Piraeus Bank, the EBRD said on Friday.
Balbec Capital is a private investment firm with expertise in alternative credit investments. It has invested more than $3 billion in 16 countries. ASP services a wide range of distressed debt portfolio types via regionally located branches. The International Finance Corp is a member of the World Bank Group, the largest global development institution focused exclusively on the private sector.
Saddled with billions of euros of sour loans, Greek banks are struggling with the highest ratio of so-called non-performing exposures (NPEs) in Europe following the country’s seven-year debt crisis.
Top lenders including Piraeus Bank, Greece’s largest lender by assets, had an NPE ratio of 47.6 percent at the end of June versus an average 4.5 percent in Europe.
Reducing the pile is a crucial towards cleaning up balance sheets, helping banks to cut loan-loss provisions and free up capital for new lending to support Greece’s economic recovery.
The EBRD said the NPE transaction supports the stability of Greece’s banking sector, helping to reduce bad loan exposures.
The EBRD started investing in Greece on a temporary basis in 2015 to support its recovery. To date it has invested more than 2 billion euros in more than 40 projects.
The transaction is the second sub-project under the EBRD’s 300 million euro NPL Resolution Framework that was launched last year, involving the purchase of a non-performing loans portfolio in Greece.
Earlier this week the EBRD said it invested in a bad loan portfolio originated by Greece’s Alpha Bank, jointly with Waterfall Asset Management and B2Holding.
The EBRD said its portion in the Piraeus Bank NPL sale will be 15 million euros. [Reuters]