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NPLs up for sale

By George Telaveris

Although Cyprus remains an untested market on loan sales, this will soon change as new players who mean business are entering the market.

Bank of Cyprus was first in agreeing to sell a small number of restructured non-performing loans of developers and construction companies to Cdbbank. Hellenic and the Cyprus Coop Bank are soon to follow with joint ventures with APS and Altamira respectively.

“Both APS Holding and Altamira are experts ready to play a significant role in loan sales, and we could be about to see a significant reduction of non-performing loans,” a person familiar to the matter told the Cyprus Weekly.

Hellenic Bank and APS announced last week the operation of a company that will manage the bank’s real estate assets and service the portfolio of €2.4 billion in non-performing loans.

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Meanwhile, the Cyprus Cooperative Bank and Spanish giant Altamira Asset Management agreed to set up a joint venture for the management of the lender’s €7.2 billion in NPLs and €0.4 billion in real-estate assets.

Altamira is the second largest asset management company in Europe with a €65 billion portfolio under management. Altamira started as Banco Santander’s troubled loan and property loan platform. In 2014, the US Apollo Global Management Fund put down the capital to purchase Altamira with a total investment of more than €600 million.

APS is one of the leading distressed debt investors and recovery firms in Central and South Eastern Europe and acquired assets with nominal value of €4.4 billion.

“Both Altamira and APS with their experience guarantee the servicing of loans, and that will allow banks to sell at the right price” a bank official told the Cyprus Weekly under the condition of anonymity.

While Cyprus could be an opportunity in waiting for debt investors, the business community and in-debt households could find the change particularly painful.
“Lenders are pressured to reduce their non-performing exposure to normal levels by 2022 and this pressure inevitably will roll over to lenders” the same person said.

Banks still have an NPL stock of around €30 billion and between 2018-2022 we will experience the biggest loan sale in Cyprus history.

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