Insider Economy New red loans up for sale

New red loans up for sale

There is movement in the sale of non-performing loans to foreign investment funds from the island’s two big systemic banks. And if things go according to plan, the banking system of Cyprus will get rid of about €3.5 billion to €4 billion of NPLs before the end of the year.

A second round of deleveraging is set to begin a year after the big sale of €2.7 billion of NPLs by Bank of Cyprus. Pacific Investment Management Co, known as Pimco, appears ready to buy €1.5 billion of red loans from Hellenic Bank, according to a Bloomberg report.

However, the ongoing debate in the House of Representatives over the new foreclosures bill which basically slows down the process could affect the sale of packages of NPLs.

The European Central Bank has already expressed deep concern over this, saying that due to the key role the sale of NPLs packages plays in the bid by banks to reduce red loans, the amendments to the foreclosures bill will burden prospects for the successful completion of such plans.

Investors are reportedly demanding a stable legal framework that will allow them to properly price the deals they are negotiating. And most importantly, the significantly prolonged period of sale of collateral under the new foreclosures process will have a “significant impact on the sale price of such portfolios”.

As far as Hellenic Bank is concerned, the Bloomberg report refers to two well informed sources who confirm that Pimco, which already owns 17.3% of Hellenic’s shares, made a non-binding bid for the portfolio.

The process for the binding bidding is likely to be carried out in September.

Pimco seeks to boost investment in southern Europe following the acquisition of Eurobank’s €2b secured debt in June, as well as assets from Italy’s UniCredit SpA. Hellenic had a small sale of non-performing loans at the beginning of 2018 and was the first bank to make such a move.

Hellenic Bank is not hiding its interest in a new sale of NPLs. The bank currently looks into ways to dispose most of NPLs on its balance sheet so that the percentage is significantly reduced to below 10% of the total. This move seems to be – more than ever – viable by prevailing conditions in the bank, given the recent capital increase and the anticipated profitability over the coming quarters.

Top Stories

UK helps employers with slow phase-in of job shield costs

British finance minister Rishi Sunak offered fresh help to employers hit by the coronavirus shutdown on Friday, announcing that future contributions they must make...

One new Covid-19 case from repatriations

There was one new Covid-19 case in Cyprus, the Health Ministry said on Friday, from a total of 2363 tests, bringing the total number...

Limassol: Dead body found in warehouse

  A body has been found in the light shaft of a warehouse on Nicos Georgiou street in Limassol, philenews reports. It said the body of...

Holy Synod to allow weddings during pre-Christmas fasting period

As a result of Covid-prompted wedding postponements, the Holy Synod has decided to allow wedding ceremonies during the pre-Christmas fasting period this year until...

President to discuss phase 3 with scientific advisors on Tuesday

  The team of scientists advising the government on the coronavirus outbreak are due to hold a new meeting with President Nicos Anastasiades on Tuesday...

Taste

Local cuisine: An introduction

Rich in fresh ingredients and tasty herbs, offers the very best of Mediterranean culinary delights. Head out to a tavern and feast on a...

Spiced lamb with beetroot salad and scented yoghurt

Lay the lamb on a tray, skin side down. Rub with crushed garlic, sprinkle with spices and ground pistachios, wrap in plastic wrap and...

Easy seafood pasta with white wine sauce

Ingredients: 2-3 tbsp olive oil 1 garlic clove, chopped 2-3 tablespoons of whipped cream 1/3 cup white wine 300g spaghetti, roughly broken 300-400g of...

Traditional salads that will blow your mind away

This traditional salads will make you actually love salads! Cyprus may be famous for souvla and kleftiko but if you try the traditional salads with...