Piraeus Bank, one of Greece’s four largest lenders, said on Monday it had agreed to sell a portion of its bad loan notes to Intrum and Serengeti Asset Management as part of efforts to clean up its balance sheet.
Piraeus said under the terms of the deal it had agreed to sell 49% of the mezzanine and 2% of the junior notes of its Sunrise II securitised bad loan portfolio.
The Sunrise II portfolio comprises about 47,000 retail and corporate loans with a gross book value of 2.7 billion euros ($3.12 billion).
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, corresponds to 47.4% of the portfolio’s gross book value, the bank said.
Goldman Sachs Europe and Alantra CPAI acted as arrangers and financial advisors to Piraeus Bank.
The transaction is part of Piraeus Bank’s so-called Sunrise transformation programme announced in March, and follows the closing of its 7.2 billion euro Sunrise I securitisation.
Piraeus aims to achieve a single-digit NPE (non-performing exposures) ratio by early 2022.
In August it applied to include the Sunrise II senior notes in the government’s Hercules bad loan reduction scheme, meaning the Greek state will guarantee 1.2 billion euros of senior notes in the securitisation.
Subject to required approvals, Piraeus expects to remove the Sunrise II loans from its consolidated financial statements in the fourth quarter.
It said the transaction will be classified as “held for sale” as of Sept. 30, cutting Piraeus Bank’s NPE ratio to about 17%, from 45% in December last year.
The expected capital impact of the sale stands at about one percentage point over the June total capital ratio, it said.
Piraeus Bank will retain 5% of the mezzanine and junior notes of the Sunrise II securitisation as per the relevant regulatory requirements, and all of the senior notes.