Banks change structure of their securitizations

National Bank and Piraeus Bank are heading to a change in the structure of the two pending securitizations, Frontier II and Sunrise III respectively, in order for the two portfolios to adapt to the requirements of Eurostat and to obtain the approval of the Finance Ministry for their inclusion in the Hercules scheme.

The new rule that Eurostat has set for the pending securitizations to be included in Hercules is for the mezzanine part of the securitization – i.e. what is sold to investors – to be at least 8% of the senior security.

Thus, if a securitization is e.g. 1 billion euros and the senior bond is €500 million, the mezzanine bond should be at least €40 million.

This rule has not been observed in most of the securitizations that have taken place to date, and for that reason Eurostat has raised the issue of registering the guarantees in the public debt.