{"id":18638,"date":"2018-11-26T16:37:47","date_gmt":"2018-11-26T14:37:47","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=18638"},"modified":"2018-11-26T16:37:47","modified_gmt":"2018-11-26T14:37:47","slug":"greeces-eurobank-seeks-revival-with-8-billion-bad-loan-plan","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/18638","title":{"rendered":"Greece’s Eurobank Seeks Revival With $8 Billion Bad-Loan Plan"},"content":{"rendered":"
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Greece’s Eurobank Seeks Revival With $8 Billion Bad-Loan Plan<\/h1>\n<\/div>\n
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  • Plan to securitize bad debt includes merger with Grivalia<\/li>\n
  • Bank expects to reduce troubled loans to 15% of total in 2019<\/li>\n<\/ul>\n<\/section>\n
    By\u00a0Marcus Bensasson\u00a0and\u00a0Sotiris Nikas<\/p>\n

    (Bloomberg) —\u00a0<\/section>\n

    Greece\u2019s\u00a0Eurobank Ergasias SA\u00a0isn\u2019t waiting around for a state rescue, with a plan to sell about 7 billion euros ($8 billion) of troubled loans and merge with a real estate fund.<\/p>\n

    As part of the plan, the bank will merge with real estate fund\u00a0Grivalia Properties REIC\u00a0to create a new business named Eurobank, the two companies said. It will then shift non-performing debt to a separate vehicle that will issue senior, mezzanine and junior notes that the bank will initially retain. Some of the lower level notes would then be sold off to investors.<\/p>\n

    Read more: New Bank\u2019s Biggest Investor Keeps Faith After Losses<\/p>\n

    Eurobank is seeking its own solution to a mountain of bad debt while Greece races to find a nationwide approach to accelerating the sale of soured loans. The government and central bank are\u00a0weighing solutions\u00a0that include providing state guarantees and easing payments for borrowers with modest means.<\/p>\n

    \u201cThe merger is equivalent to a stealth recap for Eurobank, not in cash but in real estate,\u201d Thanassis Drogossis, head of equities at Athens-based Pantelakis Securities wrote in a note to clients. The deal, if approved by regulators, will result in \u201cfaster balance sheet healing,\u201d he said.<\/p>\n

    Shareholder Uncertainty<\/h3>\n

    Eurobank jumped by as much as 25 percent in Athens then lost most of the advance to trade up 3.4 percent at 49 cents as of 3:30 p.m. Grivalia gained as much as 15.2 percent, its largest increase since June 2012 and was up 7.8 percent. The benchmark FTSE\/Athex index also pared gains of almost 12 percent and was 4 percent higher.<\/p>\n

    Under the plan, Eurobank will retain the most senior portion of the securitized non-performing exposures, while the first losses will be borne by Eurobank shareholders who will be allocated junior notes. Between those will be a mezzanine tranche, some of which will go to Eurobank shareholders with some sold to investors.<\/p>\n

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    The deal will see Eurobank\u2019s non-performing exposures drop to about 15 percent of total loans by the end of 2019 from the current 39 percent, then into single digits by 2021, according to the statement. The deal will also strengthen the restructured lender\u2019s capital ratio.<\/p>\n

    The transaction values Grivalia shares at a 9 percent premium on their Friday close, the companies said. That sets the price of the acquisition at about 790 million euros.<\/p>\n

    The deal reunites Eurobank with Grivalia, which was first listed in its real estate unit in 2006 under the name Eurobank Properties REIC. The name was changed to Grivalia in 2014 as Eurobank cut its stake under regulatory pressure.<\/p>\n

    Positive Step<\/h3>\n

    Eurobank\u2019s plan for bad loans is a positive step for Greek banking and it proves that there is a lot of resilience and value, Piraeus Bank Chief Executive Officer Christos Megalou said in a Bloomberg TV interview.<\/p>\n

    Fairfax Financial Holdings Ltd., which currently holds an 18 percent stake in Eurobank and a 51 percent stake in Grivalia, will become the largest shareholder in the new lender with 33 percent, according to the statement.<\/p>\n

    Once the problem loans are taken out \u201cyou\u2019ll have a very well capitalized bank in a very good position to serve the Greek clients as well as the Greek economy,\u201d Fairfax founder\u00a0Prem Watsa\u00a0said in an interview with Bloomberg.<\/p>\n

    The exchange ratio proposed is about 15.81 new Eurobank ordinary shares for every one\u00a0Grivalia\u00a0ordinary share, according to the statement. Eurobank shareholders will retain the number of Eurobank ordinary shares they currently hold, the companies said.<\/p>\n

    Shares in the merged company will start trading on April 24, according to the statement.<\/p>\n

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     <\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Greece’s Eurobank Seeks Revival With $8 Billion Bad-Loan Plan Plan to securitize bad debt includes merger with Grivalia Bank expects to reduce troubled loans to 15% of total in 2019 By\u00a0Marcus Bensasson\u00a0and\u00a0Sotiris Nikas (Bloomberg) —\u00a0 Greece\u2019s\u00a0Eurobank Ergasias SA\u00a0isn\u2019t waiting around for a state rescue, with a plan to sell about 7 billion euros ($8 billion)<\/p>\n","protected":false},"author":1,"featured_media":15840,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[],"class_list":["post-18638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-2"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=18638"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18638\/revisions"}],"predecessor-version":[{"id":18639,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/18638\/revisions\/18639"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/15840"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=18638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=18638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=18638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}