ATHENS, August 10 (Reuters) – Bank of Piraeus BOPr.AT, one of Greece’s four largest lenders, has applied to participate in the government’s Hercules bad debt reduction program with a securitization of € 1.9 billion, he said on Monday.
Greek banks have struggled to reduce bad loans by around 70 billion euros, a legacy of a financial crisis that has slashed the country’s economy by a quarter. Getting rid of bad debt is crucial for their ability to lend and consolidate their profits.
The Hercules Asset Protection Scheme (HAPS) was put in place to help banks offload up to € 30 billion in bad debts.
Piraeus Bank will be the third Greek bank to apply for a public guarantee under the HAPS program after its Eurobank peers EURBr.AT and Alpha Bank ACBr.AT.
Piraeus Bank has announced that it will securitize its Phoenix portfolio of non-performing loans, mainly mortgages.
Under Hercules, banks can apply for a public guarantee on the senior tranche of an NPL securitization as long as that tranche is structured with a minimum credit rating of Double B minus and they sell the majority of the mezzanine notes and junior.
“The request concerns the granting of a guarantee from the Greek state on senior bonds with a total gross value of up to 1.0 billion euros,” the bank said.
Piraeus said it plans to seek the inclusion at a later date of another bad debt portfolio securitization, dubbed Vega, with a size of up to € 5 billion.
(Reporting by George Georgiopoulos; Editing by Nick Macfie)
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