CYPRUS: Hellenic Bank starts selling properties, follows NPLs JV

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Hellenic Bank has launched a dedicated website featuring properties for sale in Cyprus and Greece, days after it announced a joint venture to manage its portfolio of €2.4 bln in non performing loans.

At present, the website features 39 properties handled by its Property Management Unit, a separate department dedicated to administering the bank's real estate owned properties. These range from residential properties, to land plots and offices.
This is similar to REMU, the Bank of Cyprus Real Estate Management Unit set up nearly two years ago, that features a vast portfolio of properties for sale in Cyprus, Greece and Romania, including the former Orphanides shopping centre in Strovolos listed at €34 mln. This portfolio also includes assets that Bank of Cyprus inherited when it was forcibly merged with defunct Laiki Popular Bank, following the €10 bln bailout deal put together by the Eurozone to rescue the Cyprus economy.
Both banks have assets that are difficult to auction due to the depressed property market and lack of finance, and have resorted to alternative efforts to recover assets that account for the bulk of their property-based NPLs, estimated at 50% of their loans portfolios.
Hellenic Bank’s new asset management company is a 49/51 joint venture with Czech-based recoveries specialists APS Holding a.s., creating the biggest real estate asset management and debt servicing platform in the Cypriot market.
The bank’s entire non-performing exposures (NPEs) portfolio of about €2.4bn and €30 mln in real estate assets will be transferred to the new company, whereas the bank will retain ownership of this portfolio, including the ultimate responsibility for every loan.
At the same time, all 160 employees of the bank’s Arrears Management Division will be transferred to the new company, retaining their employment conditions, thus satisfying union demands.
The new company’s Chief Executive Officer is Kiki Papadopoulou, who is currently Group General Manager Arrears Management Division in the bank.
The transaction is subject to approval from the relevant regulatory authorities and is expected to be completed by the end of the first quarter of 2017. This transaction falls within the direction indicated by the ECB guidance issued to banks for the work-out of non-performing loans, and it is considered by Hellenic Bank as the most appropriate NPL strategy aimed to decisively address the issue.
The transaction has been advised by Alantra of Greece as financial adviser and Clifford Chance as legal advisors. Furthermore, George Z. Georgiou & Associates LLC advised the Bank on employment law matters and Antis Triantafyllides and Sons LLC on Cyprus Law matters.