Eurobank holds off sale decision until Greece passes bad loan law

November 13, 2019

 

 
Eurobank, Greece's third-largest lender, has put off making a final decision on the sale of its loan recovery unit FPS until it has a better picture of a plan Greece is putting together to help lenders offload bad debt.


In a board meeting held on Tuesday, the bank decided that offers from US fund manager PIMCO and Italian bad loan specialist doValue were both satisfactory. The Italians, however, are widely believed to have the edge after having made a higher bid for the unit.


The sale, said to be worth some 300 million euros, also includes Eurobank's Cairo portfolio of sour debt. It is part of the lender's plan to improve the health of its balance sheet as Greek banks come under pressure from regulators to slash nonperforming loans (NPLs) as a means of helping them up lending levels.


Greece's top four lenders hold 75 billion euros of NPLs, amounting to almost one in two loans held, left behind by the country's economic crisis.
 

Eurobank is waiting to see the full details of Greece's plan to help lenders reduce NPLs, dubbed the Hercules proposal. The scheme will provide nine billion euros of state guarantees on securitized debt to be sold to investors. However, some of the details remain sketchy, such as the final cost for lenders that choose to participate in the plan.
 

Greece is expected to submit the Hercules proposal to parliament by the end of the month but it has yet to be signed off by European bank regulators, SSM.
 

In a sign that Eurobank is preparing final decisions, Prem Watsa, the chairman and chief executive officer of Eurobank's largest shareholder, Fairfax Financial Holdings, is expected in Athens by the end of November.

 

 

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