The management of Piraeus Bank is examining the use of a model previously employed by Attica Bank for its capital boost through the securitization of its bad loans. The objective is to draw 500 million euros that will count as Tier II capital, fulfilling the commitment made by the lender to the Single Supervisory Mechanism (SSM).
The model is based on securitizing a portfolio of nonperforming loans and the issue of a bond that will be bought by foreign investors for a price that will be used to strengthen Piraeus’s capital base. This model is combined with the investor undertaking the management of the NPL portfolio transferred for a certain commission.
Sources say Piraeus has been in regular contact with investors to establish whether the market would see such a move in a positive light and buy such a bond. Confirmation of such an interest would then prompt the approval of the monitoring authorities with which the bank is in continuous consultation.
The lender’s aim is to have by early December a clear picture on the way its capital strengthening will be conducted, thereby avoiding the state’s intervention through the bank’s stakeholder, the Hellenic Financial Stability Fund.