NPL acquisition could lead to control of firms by funds
Investment funds are set to take over Greek enterprises that are still in operation, as banks are determined to proceed to the sale of their nonperforming loans.
Lenders have targeted the sale of bad loans not only of very small businesses but of small and medium-sized enterprises (SMEs) too, as they are loans that come with collateral, making them more attractive to funds. The guarantees mostly concern real estate assets, which include corporate installations and owners’ personal properties.
The sale of bad loans, especially those of SMEs, will constitute a key strategy for banks this year and next, as this is the category of companies where lenders will place emphasis.
According to the law passed in the context of the fourth review, banks can sell corporate loans without having to propose specific settlement solutions to the indebted firms. Banks are now only obliged to offer such solutions to individual borrowers.
The funds that take over the corporate loans will also undertake the role of the creditors, with full rights such as confiscations, asset liquidation, debt capitalization etc. In the cases of enterprises deemed sustainable, the funds could take over the borrowing companies’ control by turning the debts into shares, with the aim of having those enterprises transferred to a third party later on.
