By A. Doga
The Bank of Greece (BoG) is reportedly considering a framework for the upcoming licensing of companies managing and purchasing non-performing loans (NPLs) in the country that would essentially create “small banks”, in order to ensure that the secondary market in the sector functions effectively.
Allowing practically all categories of NPLs in Greece to be eligible for resale on secondary markets is a standing demand by institutional lenders, something that the leftist Greek government acquiesced to last month. Relevant legislation, in fact, was ratified by Parliament. NPLs, including mortgages in arrears, exceed 90 billion euros, and by some estimates even reach the stratospheric level of 120 billion euros.
At least 10 corporate schemes are considered as a ready to enter the new credit sector in Greece.
Based on recent reports, representatives of the still unlicensed companies have held talks with Greece’s four systemic banks, in a bid to promote what they stress are the advantages of selling-off NPLs portfolios, i.e. a higher percentage of recoupment, a speedier recovery period and lower costs.
The BoG is expected to issue licenses to successful candidates within two months of applications’ submission.
Three categories of companies, in broad terms, are ready to enter the market: new companies now being established in Greece; firms that already retain a credit institution license, such as Creditcom, as well as subsidiaries of foreign-based companies interested in acquiring a NPL portfolio in Greece.
As previously reported by “N”, beyond two completed agreements, KKR with Alpha Bank and Eurobank with Aktua, other discussions are underway by other interested companies.
Nevertheless, sector analysts have cautioned that the actual resale of NPL portfolios is a still premature development, as licensing in the sector has not commenced, let alone matured, whereas demand and supply curves are also in an embryonic state.
