Bain Capital buys €1.5bn of Greek NPLs

The sale by Piraeus Bank is the first major property-backed deal in the country amid pressure from the ECB to bring loan portfolios to the market.

Bain Capital Credit has bought a portfolio of non-performing loans with a gross book value of €1.45 billion from Piraeus Bank, Greece’s largest lender.

Piraeus said the deal, subject to approval by regulators and Greece’s HFSF bank rescue fund, which owns 26.2 percent of the lender, would reduce its non-performing exposure (NPE) ratio by 100 basis points and boost equity capital by 20bps.

The bank did not provide further details on the pricing. UBS acted as exclusive financial advisor to Piraeus for the transaction. Loan servicer Mount Street supported Bain Capital to execute the deal.

“This is the first commercial real-estate backed NPE sale taking place in our country and one which Piraeus prepared and executed methodically,” said Christos Megalou, the group’s chief executive officer.

“It sets the mark and materially contributes to the creation of the secured NPE market in Greece,” Megalou added.

Under pressure from the European Central Bank, Greece’s largest lenders are finally bringing loan portfolios to the market. Greek banks have agreed with ECB regulators to reduce their non-performing exposures to €64.6 billion by the end of 2019, from more than €100 billion.

Greece, which has had three financial bail-outs from the eurozone and the International Monetary Fund since 2010, has been slow to address its debt problem for several reasons – economic uncertainty, political instability and an inadequate NPL workout framework have not been conducive to loan sales.

However, the economy is gradually improving from a very low base, reforms have been made to the country’s judicial structure and banks are in a better position to sell NPLs having built provisions and offloaded a large proportion of their Central and Eastern European exposure.

“This investment demonstrates our interest in the market as we are excited to play a part in Greece’s recovery,” said Fabio Longo, a managing director and head of Bain Capital’s European non-performing loan & real estate business.