Banks beat their Q4 NPE target

Lenders eye the sale of expanded bad-loan portfolios and increase in auctions to achieve rapid progress

Greek banks are stepping up their bad-loan portfolio sales, after recording their best quarterly performance in reducing nonperforming exposures in the last quarter of 2017.

Kathimerini understands that Alpha Bank is increasing the content of its “Venus” portfolio from 2.5 billion to 3.5 billion euros, with candidate buyers expected to table their bids by the end of this week. Furthermore, the “Arctos” portfolio that Piraeus Bank has put up has also been expanded from 1.5 billion to 2.3 billion euros.

The grouped sales the banks are proceeding to are the result of pressure for a front-heavy reduction of nonperforming loans through sales and auctions within 2018. The lenders’ commitment to the European Central Bank’s Single Supervisory Mechanism (SSM) is for the sale of 11.5 billion euros of loans by end-2019, but this target appears likely to be achieved this year.

In the fourth quarter of last year local lenders posted a record reduction in NPEs since the outbreak of the financial crisis eight years ago, beating the target set by the SSM too.

According to estimates by credit sector officials, Greek banks’ NPE stock at end-December did not exceed 95 billion euros, against a target for 95.9 billion per the SSM plan. Back in June 2016 the sum of NPEs had amounted to 150 billion euros.

Bank officials have expressed satisfaction that things are going well on this crucial front and that this year’s reduction of bad loans may constitute a nice surprise. They say that what will make a difference is the full activation of on- 825.64 1.2348 line foreclosures – expected to increase significantly in volume as of next week – as well as the sales of bad-loan portfolios, which will exceed 5 billion euros.

The major benefit for banks from electronic auctions is not from the liquidation of assets but rather from the threat of property sales, which spurs many debtors who had refused to cooperate up until now to seek ways of paying off their arrears.