* Mostly unserviced corporate loans; Unsecured portfolio reduced by 6.2pps *
Hellenic Bank announced that it has sold a fair chunk of its non-performing loans to a Norwegian-owned recovery company, reducing its troubled portfolio by 6.2 percentage points.
In an announcement issued on the Cyprus Stock Exchange, Hellenic Bank said it had sold a portfolio worth EUR 145 mln to B2Kapital Cyprus Ltd., wholly-owned subsidiary of B2Holding ASΑ.
The Norwegian financial services company has been described by Bloomberg as a specialist “in the investment and workout of non-performing loans primarily from the banking sector, as well as providing third party debt collection solutions on behalf of clients.” It had reported a drop in income in the third quarter of 2017 and an increase in its balance sheet.
The sale by Hellenic follows a decision nine months ago to set up a recoveries subsidiary, APS Debt Servicing Cyprus, and restructuring of a significant part of its loans portfolio, presently less than half considered as non-performing.
In its stock exchange filing, Hellenic Bank said that the portfolio represented 1,977 mostly non-retail secured corporate loans issued to 1,158 borrowers.
“The transaction is not expected to have a significant impact on the (bank’s) results and the capital base, due to the current provisions that have been undertaken based on the assets (of the NPLs),” the announcement said.
“This is a further step in the reduction of the exposure of the bank to troubled loans, Specifically, the amount of non-performing loans is reduced by 6.2%,” it added.
The transaction is subject to regulatory approval and is expected to be cleared in the first quarter of 2018, the bank announcement said.
The Cyprus Mail reported that, “Hellenic Bank which posted an after-tax loss of EUR 17.8 mln in the first nine months of 2017 and is struggling with a 55.7% non-performing loans mountain, did not announce the price of the transaction. The coverage ratio of the bank’s non-performing loans with provisions was, at the end of September, 61.4%.”
The newspaper quoted a source at the bank as saying that part of the non-performing loans sold to B2Kapital Cyprus were already terminated.
In an article published in the Financial Mirror, real estate valuer Antonis Loizou said that, “whatever idea one has to help solve this situation, our first care must be the support of the banks, so that we do not have to face the situation of the bail-in of 2013. I watch the various efforts that the Bank of Cyprus is undertaking (while the other banks are at an infancy stage) regarding the swap deals, the recent creation of a real estate fund with a return of 6%, the creation of its real estate management team (REMU), etc. Notwithstanding that banks exchange their debts with real estate valued at 70% of the market value, when it comes to selling their loans in bulk to foreign investors, the latter are rather apprehensive offering a price more likely around 50%.”
Earlier in December, the state-owned Cyprus Cooperative Bank said it was hoping to raise EUR 200 to 300 mln from an initial public offering (IPO) on the Cyprus Stock Exchange, probably in the summer of 2018, with the aim of using the funds to lower its own NPL portfolio, estimated at EUR 6.7 bln, or 58.8% of its entire loans portfolio. Ultimately, the formerly cooperatively owned bank that was rescued by a double injection by the government to the tune of EUR 1.7 bln, hopes to reduce state ownership to 25%, with Citigroup appointed as an advisor in September to help with the IPO.
News reports suggested that Chinese investors had shown an interest to take a stake in the Co-op bank.
The Cyprus News Agency (CNA) had quoted Nicholas Hadjiyiannis, the bank’s CEO as saying that he expects that in 2018 — when an agreement with
In the first nine-months of the year, the bank posted EUR 63.3 mln in net losses compared to a net profit of EUR 53.9 mln in the respective period last year.
On September 1, the Co-op bank issued an optimistic projection that it expected to reduce its non-performing loans stock by over EUR 1 bln by the end of the year.
Meanwhile, the Central Bank said that NPLs in the Cypriot banking system fell in August to below EUR 21.9 bln, the lowest since December 2014, or 44.7% of the total, from EUR 22.4 bln the month before.
The drop was mainly on a EUR 365.3 mln reduction in household NPLs to EUR 11.4 bln in a month accompanied by a EUR 130 mln drop in corporate NPLs. The drop in corporate NPLs included a EUR 64.5 mln decline in bad loans extended to small and medium-size enterprises (SMEs).
