Eurobank seeks to join Greece’s bad loan scheme with third securitisation

Eurobank seeks to join Greece’s bad loan scheme with third securitisation

Eurobank applied to take part in Greece’s Hercules bad loan reduction scheme with a third securitisation, dubbed Cairo-III, the country’s third-largest bank said on Friday.

Banks in Greece have been working to reduce a pile of about 75 billion euros in bad loans, a legacy of a financial crisis that shrank the country’s economy by a quarter.

Shedding the bad debt is crucial for their ability to lend and shore up profits. The Hercules asset protection scheme (HAPS) was put in place to help the banks offload up to 30 billion euros in bad loans.

Similar to Italy’s GACS model, the scheme was created to help lenders clean up balance sheets and offload bad debt by turning the bundles of bad loans into asset-backed securities that can be sold to investors.

Cairo consists of three securitisations, each of different size and type of loan claim. They are the first such transactions of nonperforming credit in Greece for which an application to opt in to the Hercules scheme has been submitted.

Eurobank had already submitted two applications to the country’s finance ministry to opt in to Hercules with two securitisations dubbed Cairo I and II.

Its application to opt in to Cairo III relates to the provision of a Greek state guarantee on senior notes amounting to 754 million euros in total, it said.

Eurobank aims to reduce its ratio of non-performing exposures to 15% in the first quarter.


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