November 19, 2019 / 4:13 PM / 3 months ago

UPDATE 2-Alpha Bank plans 12 bln euro bad loan sale, profits fall

* Alpha to securitise 12 bln euros of NPEs

* Aims to cut NPE ratio to 20% from 44%

* Will apply for up to 3.7 bln euros in govt guarantees (Adds carve out of loan servicing platform)

By George Georgiopoulos

ATHENS, Nov 19 (Reuters) - Alpha Bank on Tuesday reported lower third-quarter profits after higher bad debt provisions and said it would launch a big securitisation of soured loans to clean up its balance sheet.

Alpha, 11% owned by the country’s bank rescue fund HFSF, reported net profit from continuing operations of 4.8 million euros after net earnings of 59.4 million euros in the second quarter. Provisions for bad debt rose 6.3% quarter-on-quarter to 261.5 million euros.

Alpha, Greece’s fourth largest bank, said it planned a 12 billion euro ($13.29 billion) securitisation of soured loans or so-called non-performing exposures (NPEs) to speed up balance sheet clean-up and cut its NPE ratio to 20% from 44%.

“We are embarking today on a comprehensive transformation plan, designed to leave the financial crisis behind us by dealing decisively with legacy asset quality issues and by improving significantly our profitability,” CEO Vassilis Psaltis said in a statement.

The bank said the Greek government’s Hercules asset protection scheme will “act as a catalyst” as it intends to apply for up to 3.7 billion euros of state guarantees for the securitisation under the scheme.

The scheme, approved by the European Commission in October, will help Greek banks to offload the non-performing loans clogging their balance sheets and constraining them from funding the country’s recovering economy.

Banks in Greece have been working to reduce a pile of about 75 billion euros in bad loans, the legacy of a decade-long financial crisis that shrank the country’s economy by a quarter.

Alpha said its non-performing loans ratio dropped to 30% of its book from 32.7% at the end of June.

The bank said it also intended to carve out a chunk of its bad loan management platform to loan servicer Cepal Hellas, creating a new servicer New Cepal, that will be sold to investors.

Alpha said it will work to reduce further its core non-performing loan book via restructuring, aiming for a ratio of less than 10% for operations at home by 2022. It aims for new loan disbursements of 14 billion euros up to 2022.

$1 = 0.9028 euros Reporting by George Georgiopoulos. Editing by Jane Merriman

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