November 1, 2019 / 2:32 PM / 10 days ago

Piraeus, Intrum set up largest bad loan servicer in Greece

* Deal values loan servicing platform at 410 mln euros

* Intrum paid 328 mln euros for 80% stake

By George Georgiopoulos

ATHENS, Nov 1 (Reuters) - Greek lender Piraeus Bank’s partnership with Swedish loan servicer Intrum to manage bad loans will create the biggest independent loan servicer in the Greek market, executives at both firms said on Friday.

Last month Piraeus, Greece’s largest lender by assets, wrapped up a deal with Intrum, setting up a large servicer of non-performing loans and real estate assets, as part of efforts to reduce its risk from bad debt.

Greek banks have been working to reduce a pile of sour credit, about 75.4 billion euros ($83.95 billion) at the end of June, the legacy of a financial crisis that shrank the country’s economy by a quarter.

“The deal is the biggest foreign direct investment by a Swedish company in the Greek financial sector,” Christos Megalou, CEO of Piraeus Bank told reporters. “We have created the first independent servicer of size in the Greek market.”

The transaction valued the loan servicing platform at 410 million euros ($456.49 million) with Intrum acquiring 80% of the new company for 328 million euros. The remaining 20% will be held by Piraeus Bank.

Intrum Hellas is already up and running, managing Piraeus Bank’s 26 billion euros of non-performing exposure (NPEs). In comparison, the 18 licensed credit servicers in Greece were servicing a total of 17.5 billion euros of non-performing loans as of June this year.

The non-performing credit will stay on Piraeus Bank’s balance sheet. About 1,000 employees of Piraeus have moved to the new company.

The new company hopes to take up the loan servicing of third parties as well. Executives said there was about 10 billion euros of non-performing loans that have been bought by specialist funds which are looking for independent loan servicers.

Intrum, with a current market value of about 3.5 billion euros, operates in 24 European countries, employing 10,000 people. It did a similar deal with Italy’s Intesa Sanpaolo in December last year.

“It is our market entry into Greece, we hope to offer our value proposition to other institutions as well. We are here to stay,” said Intrum’s CEO Mikael Ericson. “We seek the right balance between amicable and legal collection.” ($1 = 0.8981 euros) (Reporting by George Georgiopoulos; editing by Emelia Sithole-Matarise)

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