May 17, 2019 / 11:22 AM / 7 days ago

UPDATE 1-Greek NBG to securitise 3 bln euros of soured loans by 2022

(Adds detail)

By Lefteris Papadimas

ATHENS, May 17 (Reuters) - Greece’s National Bank (NBG) plans to securitise three billion euros of non-performing mortgage loans by 2022, its chief executive said on Friday, as the country’s lenders battle to deal with a legacy of bad debt.

Non-performing exposures in the Greek banking sector totalled 81.8 billion euros ($91.3 billion) in December, which at 46.7% of their loan books is the euro zone’s highest.

The government and central bank have come up with more radical initiatives involving securitisations as the urgency for Greek banks to slash their soured loans rises.

Presenting the 2019-2022 strategy of the country’s second-largest lender, Chief Executive Paul Mylonas told a news conference that NBG also plans to sell three soured loans portfolios within 2019.

NBG said on Thursday that it aims to reduce its non-performing loan portfolio to around 5% of total loans by 2022, from 41% at the end of 2018.

This target does not take into account the possible inclusion of its soured loans into two different schemes that Athens and the central bank have been working on, Mylonas said.

One plan to solve the problem is an asset protection scheme (APS) that was put together by the finance ministry and the country’s bank rescue fund HFSF, which holds stakes in Greek banks after taking part in three recapitalisations.

It involves special purpose vehicles (SPVs) that would issue bonds with a government guarantee for senior tranches, similar to a model known as GACS which has been tried in Italy.

A second plan proposed by the Bank of Greece is a scheme to have banks transfer NPEs to an SPV, aiming for a single-digit NPE ratio within two to three years.

Banks would transfer a portion of NPEs and deferred tax credits to an SPV that would fund the transfer with securitisations.

Under an EU-approved restructuring plan to divest non-core assets, NBG twice failed to sell a 75 percent stake in its wholly-owned insurance unit last year.

On Friday, Mylonas said that NBG will start talking to potential investors for the sale of its insurance business soon.

“We have an obligation to sell it by 2020,” he said.

Asked if there was serious interest in the unit at the moment, Mylonas said “no”.

NBG is also looking at its operational costs, which are the highest about the country’s four biggest lenders, and will soon launch a new voluntary redundancy scheme, Mylonas added. ($1 = 0.8955 euros) (Reporting by Lefteris Papadimas; Editing by Alexander Smith)

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