Banks – Their plans for reducing red loans in 2022

Greek banks are called to go through the last mile of consolidation programs – being underway since 2019- during the first months of 2022, as they have already completed over 80% of their business planning actions.

2021 was undoubtedly a milestone year for the banking sextor, as it largely came up against the difficulties of the past, through securitization transactions and the sale of red loans over 40 billion euros.

At the same time, deals were prepared for this year. With the implementation of which the average rate of delays in the system will soon fall below 10%, for the first time since 2011.

7.5 billion euros transactions

Specifically, for the first half of 2022, the plan of the systemic groups includes transactions of overdue loans, with a book value of 7.5 billion euros.

These are:

Alpha Bank

It aims to declassify NPEs of around 5 billion euros, by next June, through the following transactions:

• Orbit: A € 1.3 billion retail loan portfolio, for which there is already a binding sale agreement with Hoist Finance. The transaction is expected to be completed in the first quarter of 2022.
• Sky: These are bad debts coming from its subsidiary in Cyprus, with a book value of 2.2 billion euros. Binding offers have already been submitted for their sale, while the completion of the deal is expected in the first half of 2022.
• Solar: It concerns loans of small and medium enterprises amounting to 400 million euros, which are expected to be sold in the second quarter.
• Other transactions: Shipping loans and leasing financing amounting to 800 million euros will be sold, with the transaction being placed in the second quarter of 2022.

At the end of 2022 the percentage of NPE is expected to fall to 6% -7%.

Eurobank

The bank has already reduced its non-performing exposures ratio to 7.3%, completing its balance sheet consolidation plan first, following Mexico’s 3.2 billion euros securitization last month.

2022 aims at an organic reduction of red loans by about 1 billion euros, which will reduce the NPE index below 5%.

National Bank of Greece

Following the completion of its € 6.1 billion Frontier securitization last month, it is planning another 1.5 billion euros red loan consolidation transaction.

At the end of 2022 it targets a delay rate of 6%.

Piraeus Bank

On 3/1 it announced the signing of an agreement with Davidson Kempner for the sale of a portfolio of Non-performing maritime exposures (NPEs), with a gross book value of 400 million euros.

This transaction reduces the NPE index of the Piraeus Financial Holdings Group to 15%. However, new transactions are expected in the forthcoming months that will reduce the index to 9%.

These are:

– Sunrise III: Securitization of non-performing exposures of 800 million euros, which is expected to be completed in the second quarter of 2022.

– Other loan sale transactions amounting to 200 million euros.

Loanσ management

The loans management will play an important role for the further de-escalation of non-performing exposures, which will be given special emphasis in the new year.

It is estimated that a significant percentage, especially in mortgage lending, can return to the green portfolios with the appropriate arrangements.

At the same time, the effort to settle, in one way or another, the loans that entered a protection regime, in 2020, and have not yet returned to the pre-pandemic installments, will be intensified.

The banking administrations estimate that the new problem loans after the outbreak of the health crisis will not exceed 4 billion euros compared to the forecasts for 8 billion euros that have been made in recent months.