First categories of NPLs headed for sale to distress funds

Friday, 13 January 2017 10:04

By A. Doga

Non-performing loans (NPLs) considered long overdue and with slim chances of repayment are reportedly the first category of outstanding debt that Greece's systemic banks want to sell-off in the secondary market, and, just as importantly, write-off from their results.

According to reports, talks are already underway with specialized distress funds.

Eurobank is expected to be the first systemic bank to sell-off a 1.5-billion-euro bloc of unsecured consumer loans, which that have already been written off from the bank's ledgers. The other three systemic banks are expected to follow.

Moreover, a recent Bank of Greece (BoG) study debunks the notion that the prospect of a sell-off of NPL blocs would put pressure on banks' capital base. Instead, the study shows that the off-loading of business and consumer loans to distress funds would be an easy endeavor and without repercussions.

Market analysts told "N" that for borrowers the sale of their loan could be viewed as an opportunity for much-needed relief from their debt loan, i.e. funds purchase the NPLs at fire-sale rates and subsequently offer terms to borrowers that provide the former with a significant write-off of their obligation and also turns a profit for the Fund.

Of the 107.5 billion euros in Non-Performing Exposures over the nine-month period of 2016, the total of exposures delayed more than 90 days reaches 80 billion euros.