Banks plan record sale of bad loans
Three of Greece’s largest lenders plan to sell up to 5.5 billion euros in bad loans by early next year, sources said, as the country’s central bank chief called on the creaking banking sector to act faster to tackle its bad-debt problem. Piraeus Bank, as well as peers National Bank (NBG) and Alpha plan to take a major step toward that goal with a record series of sales to be completed by the end of March, the banking sources said. They are responding to growing regulatory pressure to tackle the bad-debt problem, which restricts banks’ ability to expand credit and undermines Greece’s tentative economic recovery and efforts to end its reliance on European Union bailout funds. Greece’s central bank chief told Reuters on Wednesday that he wanted to see faster progress. “Banks need to be more ambitious on their bad-loan reduction targets and speed up the sales of NPLs,” Bank of Greece Governor Yannis Stournaras said by telephone. If Piraeus, National Bank and Alpha sell up to 5.5 billion euros combined as planned, overall NPL sales would reach 7 billion euros, or around 18 percent of the task set by the ECB. However, the sales are mostly of loans already written down heavily on bank balance sheets and unlikely to result in any substantial further losses. The bigger challenge comes when they must deal with the bulk of their secured bad loans. “Outright sales of unsecured NPLs will be the ones to start the dance,” a senior Alpha banker said. Eurobank launched Greece’s first major sale of bad debts this month, shifting loans with a face value of 1.5 billion euros to Sweden’s Intrum, which paid 45 million euros or just 3 percent of the nominal value. The banking sources did not name likely buyers for the upcoming sales. Acquirers in similar auctions in Italy and Spain have included Pimco, Fortress, Cerberus, Apollo Global Manage-