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24,806 red loans transferred to funds

February 7, 2019 at 9:04am
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Cyprus’ momentum of deals for unloading red loans from bank balance sheets continues. To date, 24,806 non-performing loans of small businesses, large corporations and individuals, worth close to €3 billion, have been transferred to foreign funds. And there are more to come.

A new landscape has been formed in the domestic real estate market, firstly due to the volume of NPLs and secondly due to the housing issue. It is no coincidence that funds specialising in NPLs, foreign consultants in real estate evaluation and investment, as well as real estate consultancy companies are showing substantial interest in bank portfolios.

Bank of Cyprus announced yesterday (Wednesday) that it sold red loans worth €33.7m to APS, a company known in Cyprus from its participation in Hellenic Bank’s Red Loan Management Platform. The portfolio consists of 9,700 long-term loans, including 8,800 by individuals and 900 by small to medium-sized enterprises.

In August 2018, Bank of Cyprus announced the sale of more than 14 thousand non-performing loans totaling €2.8 billion to Apollo Global Management LLC. The gross price of the deal amounted to €1.4 billion in cash, with €2.7 billion related to non-performing loans with mortgage-backed property. The portfolio consists of 14,024 loans to large and small to medium-sized enterprises, secured with over 9,065 properties.

Hellenic Bank was the first to open the process of selling non-performing loans. In June 2018, it sold a portfolio of non-performing secured and non-secured loans, mainly non-retail, to B2Kapital Cyprus Ltd – amounting to €144 million. The package consisted of 1,082 borrowers and 1,809 loans (in any case by May 31, 2018). Apparently, the sale of Hellenic red loans is not going to stop. As reported in the bank’s prospectus, “(Hellenic) assesses whether additional potential sale of non-performing loans could accelerate the decline in the portfolio of NPLs.”

In addition, there are also the non-performing loans of €7 billion of the absorbed Co-operative Bank of Cyprus that have been left behind with KEDIPES and whose management was undertaken by Altamira.

Since 2017, foreign platforms undertook part of non-performing Cypriot loans under their management. Bank of Cyprus has entered into a cooperation agreement with Pepper Cyprus Limited. Hellenic Bank launched the operation of APS on July 1, 2017. Alpha Bank Cyprus is also involved in the transfer and management of non-performing loans, as it is reportedly at an advanced stage of negotiations with non-performing loan management companies so as to choose one that will take over the management of its entire portfolio, estimated at €2 billion.

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