Piraeus Bank S.A. on Monday announced a long-term strategic partnership with Intrum to establish a market-leading servicer of non-performing assets in Greece, in a deal valued at 410 million euros.
The Greek systemic bank, in an announcement, said that it has entered into a strategic partnership with Intrum for the management of Non Performing Exposures (“NPE”) and Real Estate Owned Assets (“REOs”) through the establishment of a market-leading independent non-performing assets servicing platform in Greece.
The key components of the Transaction are:
Piraeus Bank’s internal Recovery Banking Unit platform will be transferred to a new servicer company; 80 pct of the new servicer company will be held by Intrum and 20 pct by Piraeus Bank;
The new servicer company will enter into a contract to service the Bank’s existing 27 billion euros NPE portfolio, together with any new inflows, on an exclusive basis. The new servicer company will also manage NPE of third parties. The initial term of the contract will be for ten years and will include terms and conditions consistent with similar precedent market transactions. The new servicer company will be licensed and regulated by the Bank of Greece;
A second servicer company will be formed, with the same shareholder structure that will manage the Bank’s 1.0 billion euros REOs, together with any new flows. This company will also service REOs of third parties;
George Georgakopoulos will assume the role of CEO of the new servicer companies.
The agreement values the platform at 410 million euros. Total purchase price for Ιntrum’s acquisition of 80 pct of the platform has been agreed at 328 million euros. Piraeus and Intrum aim for transaction closing on 1 October 2019. The strategic partnership provides a material boost to the execution of Piraeus’ de-risking strategy. Key benefits for the Bank include:
Enhancement of Piraeus’ NPE recovery prospects, facilitating the achievement and potential outperformance of the Bank’s NPE reduction targets;
Leverage of the existing platform with Intrum’s best-in-class practices and extensive servicing experience in multiple European jurisdictions;
Creation of a leading, independent servicer in Greece that will facilitate future NPE transactions;
The Transaction is capital accretive for Piraeus Bank;
Participation in the enterprise value growth of the new servicer companies;
Assets and proceeds of the serviced portfolio remain on the balance sheet of the Bank;
Piraeus Bank management team will re-focus on core banking activities, yielding improved results for the Group.
The transaction is contingent on customary conditions, regulatory approvals and the consent of the Hellenic Financial Stability Fund (HFSF).
“This transaction is a milestone for Piraeus Bank in terms of its de-risking strategy. We have found in Intrum the right long-term industrial partner to proceed with this joint venture. The joint venture will enable us to boost the efficiency and effectiveness of managing our non-performing exposures. The new Piraeus Bank that will emerge post the transaction will be an agile and results-oriented organization. We will focus on core banking activities and will continue catering to the needs of our customers, shareholders and stakeholders”, Christos Megalou, Piraeus Bank’s Chief Executive Officer, said.
UBS Europe S.E. and PricewaterhouseCoopers Business Solutions S.A. are acting as financial advisors of Piraeus for the transaction. Milbank LLP is acting as international legal counsel and Karatzas & Partners Law Firm as Greek legal counsel to Piraeus for the Transaction. Octane has been acting as licensing advisor in respect of the new servicer entity.