Eurobank signs deal with doValue to sell bad loan portfolio notes

Eurobank (EURBr.AT), one of Greece’s four largest lenders, signed a deal with credit servicer doValue (DOVA.MI) to sell a portion of mezzanine and junior notes of a 5.2 billion euro ($6 billion) non-performing loan portfolio securitisation, it said on Monday.

Greek banks are cleaning up their balance sheets from non-performing loans via outright sales and securitisations in an effort to reach single-digit non-performing loan (NPL) ratios next year to bring them close to eurozone averages.

The portfolio of non-performing loans, dubbed project Mexico, has a gross book value of 3.2 billion euros and doValue will be servicing the sour loans.

The transaction is expected to be completed by end-December subject to certain conditions, including the issuance of a ministerial decision to include the Mexico securitisation in the government’s Hercules II bad loan reduction scheme.

Eurobank said the non-performing loans of the Mexico secutitisation will be reclassified as ‘held for sale’ in the third quarter.

Completion of the sale of Mexico notes and the derecognition of Mexico loans will take place in this year’s fourth quarter.

The transaction will have no material impact on Eurobank’s regulatory capital ratios and its NPE (non-performing exposures) ratio is expected to stand at 7.3%.

Alantra Corporate Portfolio Advisors International advised Eurobank on the sale.

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