Private equity group KKR gets nod on bad loans in Greece

Pillarstone, bad loans Greece

Greece's main banking authority, Bank of Greece , has issued a licence to US private equity group KKR to do business in the country. This means KKR will now be able to take billions of euros of bad loans from Greek lenders and manage the non performing loans through its Pillarstone platform.

So what?

If Greek banks can reduce all these bad loans they have, more than 100 billion euros, they then have a chance of resuming lending to the economy. A resumption of normal lending practices in Greece can help breathe life into markets that have been hit hard by the seven year crisis, such as residential housing. A pick up in money being spent in the economy by households and business could also support demand for commercial property.

Another reason this news is important is that many problem loans to be dusted off by KKR are tied to real estate. This may result in the property being sold, boosting large supply levels in the country, or KKR may decide to keep the asset and pour in additional funds to improve its performance.


Zooming out

In addition to KKR having been issued this licence, the Bank of Greece has also recently allowed two more companies to handle non performing loans: Financial Planning Services (belongs to Eurobank) and Aktua Hellas (jointly owned by Alpha Bank and Spain's Aktua). At the same time, Greece's largest lender, Piraeus Bank will launch next month online property auctions in the first auction procedure of its type in Greece. After years of delays, there looks to be finally be some progress on how banks can reduce these problem loans, in what is a key problem for the struggling Greek economy.