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Project Helix 2: Bank of Cyprus sold €1.46 bn NPLs to PIMCO

The Bank of Cyprus announced the sale of €916 m in NPLs PIMCO. The sale is part of the Helix-2 project. Project Helix, launched some years ago, represents a significant milestone in the delivery of the bank’s strategy of improving asset quality through the reduction of NPEs.

Analysts hailed the move, noting that it gave the BOC balance sheet a considerable boost, and noting that the bank’s reserves will see some small impact, but nothing worth the notice of regulators.

Group Chief Executive Officer Panicos Nicolau commented: “We remain committed to further de-risking of the balance sheet and we will continue to seek solutions, both organic and inorganic to achieve this. We will continue to assess the potential to accelerate the decrease in NPEs on our balance sheet through additional sales of NPEs in the future.”

PIMCO is also to pay compensation to BOC if managing the NPLs generates profit.

The Portfolio has a contractual balance of €1.46 billion and it comprises 22,224 loans, mainly to retail and SME clients, secured over 5,616 real estate collaterals. The net book value of the assets sold, amounts to €440 million. The consideration amounts to 46% of the gross book value and 29% of the contractual balance payable in cash, of which35 % is payable at completion and the remaining 65% is deferred without any conditions attached. The deferred component is payable in three broadly equal instalments over 48 months from completion.

With the sale, the bank cuts the value of NPLs by 83% compared with 2014. The reduction of NPLs during the first six months of 2020 reaches a value of €1.3 bn, with an organic reduction of €278 m.

Morgan Stanley & Co. International plc, and KPMG LLP acted as financial advisors, Allen & Overy LLP as the Bank’s principal legal advisors in English law, and Chrysafinis and Polyviou as the Bank’s principal legal advisers for the Cypriot Law.

Original Source: Kathimerini.com.cy

Adaptation/Summary: Kiki Athanasiadis

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