By Stelios Orphanides
Hellenic Bank, Cyprus’s third largest lender, said that it signed an agreement with APS Holding s.a. to set up APS Recovery Cyprus Ltd that will manage the bank’s loans in arrears and its real estate assets.
APS Holdings will own a 51 per cent stake in the new unit while Hellenic will own the rest, the bank said in an emailed statement on Wednesday. The two sides signed the agreement, subject to regulatory approval, on Tuesday. If approved, the deal is expected to enter into force in the first quarter of the year.
“The operations of the current arrears management division of the bank will be transferred to the new company, including the necessary resources to carry out such work independently in exchange for a positive consideration,” the bank said without providing details about the value of the consideration. Kiki Papadopoulou, who heads the bank’s arrears management division will be APS Recovery’s chief executive.
Upon completion of the transaction, the bank will announce further details, Hellenic said.
“The bank will retain the ownership of the portfolio of non-performing exposures and real estate assets,” Hellenic said. “It is anticipated that a portfolio of non-performing loans of about €2.4bn will be serviced by the new company upon establishment”.
The selection of APS, a Czech company, specialised in debt servicing in 11 central and southern European countries, resulted from a competitive bidding process, the bank said. APS counts among its clientele Merrill Lynch, Bank of America, Unicredit, Fortis Bank, Banco Populari, Deutsche Bank and others.
“This agreement is of huge strategic importance for Hellenic Bank and falls under the group’s strategy of reorganising and transforming its business model,” the bank said. “The main pillars of the strategy are the reduction of non-performing exposures, the expansion of new lending thus increasing the bank’s market share and the increase of its revenue through other banking activities”.
“This transaction falls within the direction indicated by the (European Central Bank’s) guidance issued to banks for the work-out of non-performing loans (NPL) and it is considered by Hellenic Bank as the most appropriate NPL strategy aimed to decisively address the issue,” the bank said.
Hellenic added that Alantra and Chifford Chance were the financial and legal advisors for the transaction, while law firm George Z. Georgiou & Associates advised the bank on employment law matters. Law firm Antis Triantafyllides and Sons advised on Cypriot law matters.