Piraeus Bank hires advisers to auction off $7.8 billion of bad loans, sources say

Piraeus Bank hires advisers to auction off $7.8 billion of bad loans, sources say

Piraeus Bank has hired JPMorgan and UBS to sell two portfolios of soured loans worth about 7 billion euros as it scrambles to clean up its balance sheet and tackle a new debt crisis triggered by the novel coronavirus, sources told Reuters.

Piraeus, Greece’s largest lender by assets which is 26%-owned by the country’s HFSF bank rescue fund, aims to conclude the securitisation of the two loan portfolios between the end of 2020 and the start of 2021, three sources familiar with the matter said.

JPMorgan has won the mandate for Piraeus’ biggest debt auction, dubbed Project Vega, which consists of 5 billion euros ($5.62 billion) of non-performing loans (NPLs), while UBS is handling the 2 billion euro Project Phoenix sale, the sources said.

Advisory firm Alantra is working on both projects alongside the other banks, they said.

JPMorgan, UBS and Alantra declined to comment while Piraeus was not immediately available.

Piraeus may only pocket between 250 and 300 million euros from the sales given the rich discounts demanded by investors to ease balance sheet clean-ups of troubled Southern European lenders, one of the sources said.

Both transactions will take advantage of Greece’s Hercules bad debt reduction scheme which provides state guarantees for the senior tranches of the securitisations.

The sale comes as Greek lenders, including Alpha Bank, resume efforts to divest NPLs after the disruption caused by the coronavirus outbreak.

Negotiations to find a new owner for Piraeus’ smaller Iris portfolio, consisting of 600 million euros of private debt such as credit card and leasing loans, are in the final stages, the first source said.

The bank, led by Christos Megalou, has also bundled about 300 million euros of secured corporate debt in a portfolio known as Trinity which is up for sale, the same source said.

Project Phoenix consists only of residential mortgages while Project Vega has 1 billion euros of residential mortgages and 4 billion euros of commercial loans.

One of the sources said Project Vega – comprising 53,000 loans with 43,000 real estate properties as underlying collateral – will be securitised through three different special purpose vehicles to provide flexibility.


Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.