Greece's Eurobank struggles to flip loan-recovery unit to PIMCO - sources
04/10/2019 10:19
By Pamela Barbaglia, Valentina Za and George Georgiopoulos
LONDON/MILAN/ATHENS, Oct 4 (Reuters) - Greece's Eurobank
EURBr.AT is struggling to finalise a deal to sell a majority
stake in its loan-recovery business to U.S. money manager PIMCO,
sources familiar with the matter told Reuters, after a Sept. 30
deadline passed with no agreement.
The sale is a key component of clean-up efforts at Greece's
third-biggest bank, which has pledged to quickly cut the problem
loans that comprise more than a third of its total lending.
On July 1 Eurobank picked PIMCO, its sixth-biggest investor,
as the preferred bidder for an 80% stake in its Financial
Planning Services (FPS) unit, setting a three-month deadline to
reach an accord.
One of the sources said Eurobank valued FPS at about 300
million euros ($329 million) and was struggling to bridge a
valuation gap with PIMCO, which judged the unit's worth at well
below that threshold.
Eurobank is keen to finalise the sale of FPS, sources at the
bank said, and is continuing talks with PIMCO despite diverging
views on the value of the unit.
European Central Bank supervisors have been pushing southern
European banks to shed loans that turned sour during the last
recession. Now that economic growth in the bloc is faltering
again, they are keen for lenders to step up their efforts.
Big portfolio sales have opened up a lucrative market for
investors in risky assets.
Loan recovery units such as FPS, which carry with them
long-term debt collection contracts, are particularly sought
after, and banks have been selling them together with bundles of
loans.
RIVAL BIDDERS
FPS had drawn interest from an investment consortium
consisting of U.S. activist fund Elliott, U.S. buyout fund Bain
and Italian credit management group Cerved CERV.MI .
Italy's biggest bad-loan specialist, doValue DOVA.MI ,
owned by SoftBank-backed 3248.T Fortress Investment Group,
also made a preliminary bid this year but failed to enter
exclusive talks.
Verona-based doValue has operations in Greece and last year
clinched a deal with Eurobank and three other lenders to manage
1.8 billion euros in soured corporate loans.
Set on pursuing expansion abroad, doValue this year bought
Spanish bad-loan manager Altamira.
The two bidders remain interested in buying FPS and are
trying to match Eurobank's price expectations, three sources
said, with one adding that Eurobank may consider relaunching the
process in coming weeks.
All interested parties declined to comment.
Greek banks hold 75 billion euros in impaired loans and are
seen following in the tracks of their Italian rivals, which in
recent years have almost halved soured debts on their balance
sheets from a post-crisis peak of 350 billion euros.
Unpaid loans weaken the banking system by hurting profits
and lifting funding costs due to investors' heightened risk
perception, ultimately restricting the ability to lend.
($1 = 0.9115 euros)
(Editing by Dale Hudson)
((pamela.barbaglia@thomsonreuters.com; +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))