Piraeus Bank pursues balance sheet clean up with bad loan sale

Piraeus Bank said on Monday it had sold a portion of its securitised bad loans to Intrum and Serengeti Asset Management as part of efforts to clean up its balance sheet.

Greek banks have been reducing a large stock of impaired loans built up during the country’s decade-long financial crisis and aim for a single-digit bad loan ratio next year.

The transaction is part of Piraeus Bank’s so-called Sunrise transformation program announced in March and follows the closing of its €7.2 billion Sunrise I securitization.

Piraeus, one of the country’s four largest banks, said it had sold 44% of the mezzanine notes of its Sunrise II securitized bad loans to Intrum and 7% to Serengeti Opportunities Partners.

The Sunrise II portfolio comprises about 47,000 retail and corporate loans with a gross book value of €2.7 billion.

When it announced the deal in early November, Piraeus said the implied valuation of the sale, based on the nominal value of the senior notes and proceeds from the sale of the mezzanine and junior notes, corresponded to 47.4% of the portfolio’s gross book value.

Goldman Sachs Europe and Alantra CPAI acted as arrangers and financial advisers to Piraeus, which aims to achieve a single-digit non-performing exposure ratio by early 2022.

Piraeus Bank will retain 5% of the mezzanine and junior notes of the Sunrise II securitization in line with relevant regulatory requirements, and all of the senior notes.

The bank said the capital impact of the sale represented a 50-basis point boost to its total capital ratio in September. [Reuters]