Piraeus Bank has concluded a deal with Sweden’s Intrum to create a company to service its bad-loan portfolio, it said on Wednesday.
Bad loans are the biggest challenge facing Greek banks, the legacy of a crippling debt crisis which shrank the economy and sent hundreds of thousands into unemployment, constricting the ability to repay debt.
Piraeus said a new company, established on September 16, is 80 percent owned by Intrum with Piraeus retaining a 20 percent equity stake.
The two parties had announced their intention to team up in June.
Piraeus had 26.1 billion euros of nonperforming exposures (NPEs) at the end of June.
“The strategic agreement is expected to further facilitate the NPE derisking strategy of Piraeus Bank,” the bank’s CEO Christos Megalou said in a statement.
Piraeus said the new entity would service its existing NPEs and its real estate asset portfolio, together with any new inflows on an exclusive basis.
Assets and proceeds of the serviced portfolio remain on its balance sheet.