December 19, 2019 / 10:45 AM / 2 months ago

Italy's doValue clinches deal for Eurobank's loan recovery unit

ATHENS/LONDON (Reuters) - Italy’s top debt recovery firm doValue (DOVA.MI) said on Thursday it had clinched a deal for a majority stake in Eurobank’s (EURBr.AT) loan collection unit FPS.

FILE PHOTO: A man uses an ATM outside a Eurobank branch in Athens, Greece, August 26, 2019. REUTERS/Alkis Konstantinidis/File Photo

The deal values Financial Planning Services (FPS)- part of Greece’s third biggest bank Eurobank - at 310 million euros ($344.97 million).

Verona-based doValue has secured an 80% stake in the business for 248 million euros after lengthy negotiations, trumping a rival bid by U.S. money manager PIMCO.

The transaction allows Eurobank, which was advised by Mediobanca, to offload 7.5 billion euros in impaired loans, two sources familiar with the matter said.

DoValue, which hired Barclays on the deal, said the deal would make it a market leader in loan servicing in Greece, boosting its loans portfolio in the country to 28 billion euros.

The accord includes a 10-year loan recovery contract for FPS which will generate a steady revenue flow for the firm.

The Italian bad-loan specialist, owned by SoftBank-backed (3248.T) Fortress Investment Group, has made international expansion across Southern Europe a key focus, particularly in Greece where local banks are under pressure from European Central Bank (ECB) supervisors to cut their problem loans.

Last year it won another deal with Eurobank and three other lenders to manage 1.8 billion euros in soured corporate loans.

The FPS sale is a key component of clean-up efforts at Greece’s third-biggest bank, which has pledged to quickly cut the impaired loans that comprise more than a third of its total lending portfolio.

Greek banks hold 75 billion euros in impaired loans and are seen following their Italian counterparts, which in recent years have almost halved soured debts on their balance sheets from a post-crisis peak of 350 billion euros.

Banks typically deploy the proceeds from the sale of loan collection units such as FPS to offset the losses from the disposals of soured loans which are normally sold at a loss.

Additional reporting by Valentina Za; editing by David Evans and Alexandra Hudson

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