Piraeus Bank, the leading lender in Greece, announced on Monday it has teamed up with Sweden’s Intrum for the management of its 27-billion-euro ($30 billion) bad loan portfolio.
The agreement, which, according to the Bank, will provide a boost in its de-risking strategy, will come into effect on October 1, 2019 and will involve the establishment of a non-performing asset servicing platform in Greece.
Intrum, with its headquarters in Stockholm, is an industry-leading provider of credit management services and has a presence in twenty-four markets in Europe. Intrum helps companies to become debt free by offering solutions designed to improve cash flow and longterm profitability.
The key components of the agreement are:
– Piraeus Bank’s internal Recovery Banking Unit platform will be transferred to a new servicing company; 80% of this company will be held by Intrum and 20% by Piraeus Bank;
− The new servicing company will enter into a contract to service the Bank’s existing €27 billion NPE portfolio, together with any new inflows, on an exclusive basis. The new company will also manage the NPE of third parties.
The initial term of the contract will be for ten years and will include terms and conditions consistent with similar precedent market transactions. The new servicing company will be licensed and regulated by the Bank of Greece.
− A second servicing company will be formed, with the same shareholder structure that will manage the Bank’s €1 billion real-estate-owned funds, together with any new flow. This company will also service the REOs of third parties.
− George Georgakopoulos will assume the role of CEO of the new servicer companies.
The agreement values the platform at €410 million. The total purchase price for Ιntrum’s acquisition of 80% of the platform has been agreed upon at at €328 million.
Christos Megalou, the Chief Executive Officer of Piraeus Bank, said that the agreement is “a milestone for Piraeus Bank in terms of its de-risking strategy. We have found in Intrum the right long-term industrial partner to proceed with this joint venture.
“The joint venture will enable us to boost the efficiency and effectiveness of managing our non-performing exposures. The new Piraeus Bank that will emerge post the Transaction will be an agile and results-oriented organization. We will focus on core banking activities and will continue catering to the needs of our customers, shareholders and stakeholders,” he stated.