The inaugural sale of a portfolio of “bad debt” held by Greece’s systemic banks is expected in early August, with the initial cache reportedly being non-performing consumer loans extended by Eurobank.
The sale of NPL portfolios is one of a series of measures, viewed as one of the most important, in reducing the Olympus-sized “mountain” of bad debts held by Greece’s four systemic banks. However, up until now, the sale of blocs of NPLs to distress funds has not materialized, despite pressure by Greece’s institutional creditors and the banks themselves, with the problem being a lack of an institutional framework up until now.
Economic uncertainty in the first half of 2017 led to an increase in NPLs and non-performing exposures, with write-offs employed to reduce the “bad debt” load.
Selling off blocs of NPLs is eagerly expected to improve systemic banks’ balance sheets.
According to reports, the NPL portfolios up for sale lack collateral and are years overdue.
The specific Eurobank portfolio has even been given a name, “Eklipsi” (eclipse), possible a reference to a portion of consumer credit that remains “shadowy” and without the possibility of being serviced. Latest reports put the portfolio’s nominal value at 1.5 billion euros, and 2.8 billion if provisioned interest rates are included.
