DBRS in its report emphasizes that the entry of independent servicers in the Greek NPE market is positively changing the landscape. The agency expects that the entrance of new market players will contribute positively to the efforts to reduce bad loans.
According to the report, until recently, the servicing of the Greek NPL market was undertaken by the banks’ debt service departments. In recent years, however, independent debt servicers have been established in the market, which in combination with the entry of foreign investors creates a new landscape of debt servicing in Greece.
A similar trend with the opening of the bad loan service market and the entry of more and more new players is observed in other markets with high levels of NPLs, such as Spain, Italy and Ireland. Some investors, such as Lone Star Funds and Arrow Global Group plc, are particularly active in the NPL portfolio market.
DBRS in its report refers to Intrum’s entry into the Italian and Greek NPL market. DoValue, having developed significantly in the Italian market in recent years, has also entered the Spanish market through the acquisition of Altamira and recently proceeded with the acquisition of FPS in Greece. The Italian group Cerved has also entered the Greek market, while recently the Bank of Greece granted a license to the loan management company HipoGes, which already has extensive experience in debt management in Iberia.
The approach of Intrum and DoValue to the Greek market is similar to the common approach applied in Italy: Along with the portfolio, they also acquire debt servicing personnel.
DBRS sees many advantages in this approach: Consolidating banks’ balance sheets, reducing staff, and allowing financial institutions to focus on improving the loan model.
NPE rates in Spain, Italy, Portugal and Ireland are stabilizing, while until recently – before the coronavirus crisis – they were falling sharply.
Original Source: Naftemporiki
Adaptation/Summary: Kiki Athanasiadis