Greek bank in talks with US firms to sell 10b euros in bad loans

Athens

GREECE'S Alpha Bank is in talks with at least five US investment firms including Cerberus and Pimco, in a fresh attempt to offload a portfolio of bad debt worth more than 10 billion euros (S$15.7 billion), two sources have said.

The portfolio, known as Galaxy, consists of retail loans worth 7.6 billion euros plus loans to medium and large corporate clients worth three billion euros. Alpha, the fourth largest bank in Greece, could earn 400 million to 500 million euros from the sale, the sources said.

Alpha launched the process, which includes the sale of loan-servicing platform Cepal, early this year, but halted negotiations as the coronavirus crisis struck. It has asked bidders to submit tentative offers by June 29.

Bain Capital Credit and Apollo are looking to join the race, alongside US investment firm Centerbridge, which recently agreed to sell its 60 per cent stake in Cepal to Alpha.

The sale is the most significant attempt by a Greek bank to clean up its balance sheet since the coronavirus crisis forced lenders to put transaction plans on hold.

If successful, the deal could revive disposals of non-performing loans (NPLs) across southern Europe.

Alpha aims to sign a deal by the end of the year. The process is expected to gain momentum after the summer and close in the fourth quarter.

National Bank of Greece is likely to follow suit with the sale of its Frontier portfolio while Piraeus Bank is preparing two NPL securitisations totalling seven billion euros, the sources said.

A source close to Piraeus said the bank planned to take advantage of the government's Hercules bad debt reduction scheme to smooth the sale of two portfolios, with loans worth five billion and two billion euros. REUTERS