Greek bank targets NPLs and under-performing units in recovery plan
(9 June 2017 – Greece) Greece's largest bank by assets, Piraeus Bank says will look to offload its Balkan businesses and reduce its bad loans portfolio.
Outlining the bank’s plans through to 2020, its new chief executive, Christos Megalou told reporters their vision is “to be the most credible bank in Greece.
"Our strategy plan makes sense and is not pie in the sky," Megalou.
"Our goals are demanding but achievable."
Piraeus, which is 26.2 percent owned by Greece's bank rescue fund HFSF, is still struggling with problem loans after a deep recession in Greece pushed unemployment to record highs.
Included in the bank’s sell-off plans are wholly-owned subsidiaries in Bulgaria, Romania, Serbia, Albania and the Ukraine, its 40 percent stake in shipping company Hellenic Seaways and the 33 percent stakes in fish farms Nireus Aquaculture and Selonda.
Piraeus will create a separate division to be known as "Piraeus Legacy Unit," to further clean up its balance sheet.
Piraeus Bank will remain as the "good bank" with risk-weighted assets of €28 billion and a two percent non-performing loans ratio, comprising corporate banking, retail operations and asset management. It will aim for a 1.1 percent return on assets.
The legacy unit, with risk-weighted assets of €25 billion and a 64 percent non-performing loan ratio, will include international and non-core banking operations earmarked for sale. It will aim to shrink its bad loans via sales and restructuring.
Piraeus will seek to shrink its non-performing exposures to below €20 billion by 2020 from €33.3 billion in the first quarter and its non-performing loans (loans past due more than 90 days), to around €8 billion from 23 billion at end-March.
With a market value of €1.8 billion, the group also aims to pay back €2.0 billion of contingent convertible bonds (CoCos) to the HFSF rescue fund by 2020.
"By then we will have generated the cash and capital to fully pay back the bonds," Megalou said.
The group also aims to restore its access to wholesale funding markets and reduce borrowing from the Greek central bank's emergency liquidity assistance (ELA) down to zero by 2020 from €11 billion in 2016.
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