Bad-loan management market becomes an El Dorado for funds

The Greek bad-loan management market is welcoming international firm StormHarbour, which in cooperation with Italy’s Fire SpA has created EuPraxis; this new servicer joins the long list of nonperforming-loan managers that the Bank of Greece has licensed.

A total of 18 servicers have now received operating permits from the central bank. The majority are subsidiaries of investment funds that specialize in this sector, but there is also a notable presence of Greek companies that have joined forces with foreign groups.

Besides those 18 companies there are two other firms, Hypoges and Moun Street, which are subsidiaries of foreign servicers and have already submitted their applications to the BoG and are awaiting their licensing. That will take the total number of servicers in Greece to 20.

The companies licensed to date are: Cepal, FPS, Thea Artemis (an Attica Bank subsidiary), Pillarstone, UCI, Resolute Asset Management, Independent Portfolio Management, B2Kapital, QQuant, DV01 Asset Management, Special Financial Solutions, Hoist, LPN Capital, Melfin, APS, Cerved Credit Management, EOS Matrix Greece and most recently EuPraxis.

After FPS, a Eurobank subsidiary which is the largest servicer in the Greek market and is currently managing 22 billion euros’ worth of bad loans, the second biggest is Cepal: The joint venture of Alpha Bank and US fund Centerbridge has so far undertaken the management of bad loans worth 11 billion euros.

The large number of businesses seen in the servicers market illustrates that Greece, both in terms of bad-loan management and in the property market that is developing in parallel, constitutes an El Dorado for private equity funds, as the total value of assets to be managed tops 50 billion euros. The servicers are in fact aiming to emancipate themselves from banking practices with the introduction of new methods.

The management of Eurobank has made plans to sell FPS to a foreign investor, and the process is unfolding, as last Wednesday three nonbinding offers were submitted for the acquisition of the servicer, combined with the securitization of the Pillar and Cairo portfolios. After the transaction is completed, the FPS-managed portfolio will exceed 30 million euros, making it the undisputed leader in bad-loan management in Greece for the next few years.