JP Morgan views the Hercules plan for the reduction of Greek banks’ nonperforming exposure (NPE) backlog very positively.
In a report on Friday it noted that the bad-loan transfer prices are significantly higher than those of the equivalent Italian securitization program (GACS) on which the Greek one has been modeled.
“With the Hercules plan now approved by Parliament, Greek banks are ready to follow in their Italian peers’ footsteps to boost their NPE reduction efforts with a securitization-based state guarantee scheme,” JP Morgan wrote.
“The initial reaction is promising: Banks have already announced plans to participate with 23 billion euros of securitizations, which we expect will increase further in the coming months, ultimately with the potential to cover nearly half of today’s 75 billion euros of NPE balances. Our analysis of collateral valuations shows potential transfer prices in the 34-35 percent area on average, comfortably higher than the levels seen under Italy’s GACS, and at levels more manageable for Greek banks," ιτ ψοντινθεδ.
"Banks with securitization-centric NPE reduction plans stand to benefit the most, including Alpha, Eurobank and Piraeus, with Alpha’s 12 billion-euro Galaxy securitization at the forefront.”