By Stelios Orphanides
Hellenic Bank, Cyprus’ third largest lender, said that it agreed to sell Norway’s B2Holdings ASA €145m of loans as part of its strategy to reduce its delinquent loan portfolio.
The deal, subject to regulatory approval, affects 1,977 facilities extended to 1,158 borrowers and “is not expected to have a material impact on the income statement and capital position of the bank due to existing provisions taken against these assets,” the bank said in a statement on the website of the Cyprus Stock Exchange on Tuesday.
The completion of the agreement which is “at arm’s length” and affects “predominantly non-retail secured and unsecured exposures” will reduce by 6.2 per cent the bank’s non-performing loans seen at €2.3bn at the end of the third quarter of 2018, the bank said.
“The transaction is consistent with the bank’s strategy of ‘fixing’ the balance sheet and at the same time it is in line with the European Central Bank (ECB) and International Monetary Fund (IMF) guidelines on the management of non-performing loans,” Hellenic Bank said.
“In addition to organic reduction of the problematic portfolio, the bank remains focused on accelerating the de-risking of its non-performing exposures through portfolio disposals and other transactions”.
Hellenic Bank which posted an after-tax loss of €17.8m in the first nine months of 2017 and is struggling with a 55.7 per cent non-performing loans mountain, did not announce the price of the transaction. The coverage ratio of the bank’s non-performing loans with provisions was at the end of September 61.4 per cent.
A source at Hellenic said that part of the non-performing loans the bank agreed to sell to the Norwegian company’s subsidiary B2Kapital Cyprus Ltd were already terminated.
Hellenic’s agreement is the second transaction of this type and comes after the change in legislation as part of Cyprus’ adjustment programme terms. It also follows a May 2017 agreement between Bank of Cyprus and Cyprus Development Bank involving less than one seventh of the deal announced on Tuesday.
Hellenic’s agreement is the second transaction of this type and comes after the change in legislation as part of Cyprus’s adjustment programme terms. It also follows an May 2017 agreement between Bank of Cyprus and Cyprus Development Bank involving less than one seventh of the deal announced on Tuesday.