Greece’s Piraeus Bank Sells €7.2 Billion in Non-Performing Exposures

Piraeus Bank, one of Greece’s four big lenders, announced earlier in the week that it has reached agreement with two international credit management companies to sell €7.2 billion ($8.61 billion) in of non-performing exposures (NPE).

The agreement with loan servicer Intrum and asset manager Serengeti concerns the sale of 49 percent and 2 percent of the mezzanine and junior notes in its Sunrise I securitized portfolio of impaired loans.

The Sunrise I portfolio includes retail and corporate non-performing exposures (NPEs).

“The implied valuation of the transaction, based on the nominal value of senior notes and the sale price of the mezzanine and junior notes corresponds to about 34 percent of gross book value,” Piraeus Bank said.

The sale is part of Piraeus Bank’s 19 billion euro NPE clean-up plan which aims to drive its NPE ratio down to single digits in the next 12 months.

Together with Phoenix and Vega NPE transactions, which are also pending completion this quarter, the Piraeus NPE ratio will radically drop to around 23 percent from the reported 46 percent of March 2021.

Analysts say that concerns about NPEs from the recent financial crisis in Greece are gradually easing and bankers are focusing on the key role that the banking system should play in financing the economic recovery and the utilization of resources of the Recovery Fund.

NPE is broader that the term non-performing loans, often used as it includes all debt instruments (loans and advances and debt securities) as well as off-balance-sheet exposures.

NPE includes, in addition to exposures more than 90 days past due, exposures that are “unlikely to pay,” which are designated as “non-performing” on the basis of qualitative criteria, although they are either performing or are less than 90 days past due.

Piraeus Bank’s capital increase

In late April, Piraeus Bank raised a total of 1.38 billion euros ($1.66 billion) through the capital increase process. In a press statement the Bank announced that it has successfully completed the combined offering of 1,200,000,000 new ordinary registered voting shares, each having a nominal value of €1.00.

“This capital raise will enable Piraeus Bank to pursue its ultimate target for a definitive balance sheet clean-up in the next 12 months and fuel its ambition to be a strong, future-fit, well-capitalized bank, superiorly positioned to support the Greek economy as it recovers from the pandemic,” Christos Megalou, Piraeus Group’s CEO said.

A group of shipowners in Piraeus founded Banque du Pirée (Piraeus Bank) in 1916 to finance trade. The bank started trading on the Athens Exchange in 1918.

The Greek government bought the bank in 1975 and transformed it into a universal bank. The new headquarters, designed by Sir Basil Spence, were built on Stadiou Street in the center of Athens. In December 1991 the government privatized the bank, which has grown in size and scope since then.