One of Greece’s four largest lenders, Eurobank (EURBr.AT) said on October 11, 2021, that it signed a deal with credit servicer doValue (DOVA.MI) to sell a portion of mezzanine and junior notes of a 5.2 billion euro ($6 billion) non-performing loan portfolio securitization.
Greek banks are cleaning up their balance sheets from non-performing loans via outright sales and securitizations to reach single-digit non-performing loan (NPL) ratios in 2022 to bring them close to the eurozone averages.
Dubbed project Mexico, the portfolio of non-performing loans has a gross book value of 3.2 billion euros and doValue will be servicing the sour loans.
Subject to certain conditions, including the issuance of a ministerial decision to include the Mexico securitization in the government’s Hercules II bad loan reduction scheme, the transaction is expected to be completed by the end of December. Eurobank said:
“In the third quarter, the non-performing loans of the Mexico securitization will be reclassified as ‘held for sale.”
During this year’s fourth quarter, the completion of the sale of Mexico notes and the derecognition of Mexico loans will be taking place.
Eurobank’s regulatory capital ratios will not be impacted by the transaction and its NPE (non-performing exposures) ratio is expected to stand at 7.3%.
Alantra Corporate Portfolio Advisors International advised Eurobank on the sale.
($1 = 0.8633 euros)