Eurobank completes restructuring of € 8 billion in non-performing loans


Eurobank is on course to complete the restructuring of two loan portfolios with an aggregate value € 8 billion.

The deal includes two transactions:

(a) The sale of an 80% stake of Eurobank’s subsidiary FPS (Project Europe). FPS’ entire share capital has been valued at € 310 million. Eurobank will receive € 248 million for the sale of its 80% stake in its subsidiary.

(b) The securitisation of Eurobank’s “Cairo” portfolio of nonperforming exposures (NPEs), worth € 7.5 billion (Project Cairo).

The main points of the deal are the following:

  • Eurobank sells 80% of its shareholding in its FPS NPE portfolio to doValue.

  • Eurobank’s Trouble Asset Group (TAG) will be transferred to FPS

  • Eurobank signed a ten-year contract with FPS for the management of € 5.6 billion of NPEs and € 5.7 billion of retail banking loans, as well as the management of similar future receivables.

  • In addition, FPS manages the € 2 billion (NPL) securitization (“Pillar”) securities, Cairo transaction securities and third-party portfolios of international investors. In total, the assets under management amount to approximately € 26 billion, for which it will also provide real estate management services.

  • The agreement reached values ​​the management platform at € 360 million. Specifically, the acquisition of 80% of the FPS holding is valued at € 248 million (€ 310 million for 100%), plus an additional up to € 40 million (€ 50 million for 100%), depending on achieving some economic returns over a decade.

  • Theodoros Kalantonis and Anastasios Panousis will hold positions of FPS Executive Chairman and Managing Director, respectively.

The main points of the Project Cairo transaction are the following:

  • The sale of 20% of mezzanine notes and the minimum required rate of junior notes on securitization to doValue, instead of the cash price paid. The valuation of the portfolio is based on the nominal value of the high-grade bonds and the selling price of the intermediate and low-grade bonds corresponds to approximately 33.3% of the total book value of the portfolio.

  • Eurobank will retain 100% ownership of senior notes and 5% of mid and low rating bonds and the Cairo securitisation will be included in the Credit Institution Guarantee Scheme ("Iraq").

  • The remaining mid-term and low-grade bonds will be distributed to shareholders if certain conditions are met, including obtaining the necessary corporate and regulatory approvals.

  • The nominal values ​​of the Cairo Transaction Bonds are as follows: High, Medium and Low Rating Bonds: € 2.4 billion, € 1.5 billion, and € 3.6 billion, respectively. The above values ​​have taken into account the estimated cost of participating in the “Heracles” program and are subject to an adequate credit rating.

doValue, a Verona-based firm, sealed a deal last year with Eurobank and three additional lenders to manage € 1.8 billion of non-current corporate loans. doValue’s acquisition of FPS puts them in a leading position in the Greek market for non-performing loan management.

The two sides intend to close the Transactions by the end of the 1st quarter of 2020, subject to regular regulatory approvals. The Transactions are part of the acceleration plan for the consolidation of Eurobank’s balance sheet announced on 26 November 2018.

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Sources:

Eurobank seals FPS sale to doValue

Kathimerini Greece, 19 December 2019

Έδωσαν τα «χέρια» Eurobank – doValue για FPS και Cairo

Fortune Greece, 19 December 2019

Εκλεισε το ντιλ Eurobank-doValue για FPS και Cairo

Stockwatch Cyprus, 20 December 2019

Οριστικό το deal Eurobank - doValue με αποτίμηση 360 εκατ. για την FPS

Business Daily Greece, 19 December 2019

Photo (c) Stockwatch Cyprus