Greek bank Eurobank Ergasias has taken a major step towards completing the clean-up of its balance sheet with respect to its non-performing exposures (NPE), after closing the €7.5 bn public non-performing loan (NPL) securitisation of Project Cairo.
Global investment bank and asset management firm Alantra Corporate Portfolio acted as co-arranger and financial lead advisor to the deal.
Project Cairo, the largest Greek NPL securitisation to-date and Eurobank's second public NPL securitisation in the Greek market, comprises non-performing multi-asset loans at varying stages of restructuring and enforcement processes. With a gross book value of €7.5 bn, it is also the first securitisation that is enrolled to the Greek government guarantee scheme, dubbed the Hellenic Asset Protection Scheme or Hercules, for the amount of €2.4 bn.
Vasilis Kosmas, partner of Alantra, said: 'This transaction represents a landmark deal for the Greek market, the inaugural NPL securitisation to opt in for the new Hercules asset protection scheme. We are proud to have played an instrumental part in it. We are grateful for the trust that Eurobank placed in us in supporting them over the last few months.'
Three classes of notes' notional amounts were issued, including €2.4 bn of senior notes, €1.4 bn of mezzanine notes and €3.6 bn of junior notes. Cairo's parameters accounted for the estimated costs of Hercules and are subject to the targeted rating confirmation.
Eurobank retains 100% of senior notes, and 5% of mezzanine and junior notes to comply with risk retention requirements. As previously announced, 20% of mezzanine notes and 50.1% of junior notes havee been sold to doValue, Fortress's Milan-listed financial arm, for €15 mln in cash. 75% of the mezzanine notes and 44.9% of the junior notes have been distributed as dividend in kind to shareholders.
The transaction took place in parallel with the disposal of the 80% of Eurobank's Financial Planning Services (FPS) to doValue, which said that it was seeking to establish itself as the top loan servicer and REO manager in South Europe by adding FPS to its existing business in Italy and Spain.
Eurobank recently also sold another NPL portfolio, Project Pillar, to Pimco, which will be also serviced by FPS along with the remaining performing and non-performing exposures that are still retained by Eurobank.
Eurobank said that closing Cairo enabled it to near completion of its accelerated plan announced in November 2019 for the clean-up of its balance sheet, becoming the first Greek bank to turn the corner on the major legacy issue of its NPE stock.
Cairo and Pillar represent the first NPE securitisations in Greece and key components of Eurobank’s frontloaded NPE reduction strategy, which aims to achieve the targeted NPE ratio of below 15.6%.
