Foreign firms eager to get their hands on lenders’ loan portfolios

Major distressed debt management companies from around Europe are showing a great interest in cooperation with local banks ahead of the opening up of the domestic market.

These are companies interested in creating local subsidiaries with banks so as to manage nonperforming loan portfolios, offering solution to borrowers such as the sale of a property or its rental. The issue of the sale of such portfolios from the business sector remains open, as this is a move that would lead to a new cycle of restructuring in major domains of the economy.

Among the companies to have already started talks with Greek banks and awaiting the green light to start their activity is Spain’s Aktua, which is in advanced negotiations with Alpha Bank for the setup of a joint venture, while there is also talk of Eurobank’s participation too. Strong interest has been noted from firms such as Sareb, Altamira Investment Services and Credit M (which was recently bought out by a foreign fund).

Notably, the discussions have revealed significant interest from companies offering bad loan management services in combination with portfolio acquisitions, as there are major investment funds behind them. The sale of loans to foreign funds is expected to be among the contentious issues of the next round of negotiations between Athens and its creditors, with the government seeking to contain this measure only to corporate loans, not mortgages.

The Bank of Greece is already preparing the regulatory framework regarding the criteria for the licensing of loan management companies. The relevant governor’s act will be ready by the end of the year at the latest, and the main criteria will be experience, transparency guarantees and adherence to the code of ethics in relations with borrowers. These companies will be monitored by the central bank, but their operation will not require a minimum capital as in the case of other credit institutions.

The licensing of such companies constitutes a commitment of the Greek government in the context of the bailout agreement with its creditors, while Nomura, which advises the Finance Ministry on bad loan management, has proposed the licensing of five companies.