The first NPL securitization of Piraeus Bank (project Phoenix) has started with an express tender process. The information was sent in August, the confidentiality agreements were signed and, according to the schedule, binding offers were submitted.
The portfolio consists of about 58 thousand mortgages, with a gross book value of €1.9 bn. The majority (about 67%) are terminated, while the rest are in arrears. The average receivable per borrower (22 thousand borrowers), is €90 thousand, while the average remaining term of the portfolio is about 20 years.
The loans have been transferred to an SPV, which issued securities of three classes. The senior notes, amounting to approximately €0.96 bn, will be held by the bank, while a request for a state guarantee has already been submitted by the Hercules programme.
The bank will sell to the preferred investor 30% of the intermediate and low-grade securities (mezzanine and junior notes). Another part of the above securities after the completion of the transaction will most likely be returned free of charge to the shareholders.
The market estimates that most likely to win the tender is the Swedish group Intrum, which is a strategic partner of Piraeus Bank in the servicing of its non-performing exposures and has a thorough view of the securitized portfolio.
According to unconfirmed information, Intrum is participating in the tender process for the purchase of 30% of the intermediate and low rating securities. If it wins the tender, the servicing of the portfolio will remain with Intrum Hellas, which closed the fiscal year 2019 with profits of €19.2 m. UBS is the financial advisor for the Phoenix project, while Alantra is the technical advisor.
On another note, the kick-off of project Vega (53 thousand mortgages of all categories, of which 70% are terminated) is also expected soon. The gross book value of the loans amounts to €5 bn. Of these, loans of about €1 bn are mortgages and €4 bn are corporate (small, medium and large enterprises).
Piraeus Bank estimates that the loss from the sale of the intermediate rating securities of the two securitisations will range between €1.1 to €1.4 bn. The impact from the securitization loss on the funds will be, according to the bank’s management, at the level of 180 basis points.
Given that the above losses cannot be covered by this year’s profitability, Piraeus decided to proceed with a corporate transformation, so as not to activate the provision of the law, which imposes a capital increase in favour of the State.
The Board of Directors of the bank decided to start the division process, by splitting the banking sector and contributing to a new banking company (new Piraeus).
Original Source: Euro2day
Adaptation/Summary: Kiki Athanasiadis