IFC, a member of the World Bank Group, together with consortium partners EBRD, APS Delta, and Balbec Capital LP, is investing about €50 million to acquire a portfolio of Non-Performing Exposures (NPE) from Piraeus Bank S.A. and strengthen the Greek banking sector.
The sale is an important step in reducing NPEs in the Greek banking sector, which stood at €89 billion in June 2018, representing 48 per cent of total exposures, according to Central Bank data. NPEs are expected to decrease to €65 billion by the end of 2019 as part of reduction plans lenders have agreed with supervisory authorities.
"With this—one of Greece's largest retail non-performing loan transactions—IFC is also supporting Piraeus Bank's efforts to restructure its balance sheet," said Wiebke Schloemer, IFC's Regional Director for Europe & Central Asia. "By mobilizing funding from the private sector to resolve NPLs, we are increasing the liquidity of Greek banks, freeing up capital for new lending and supporting the broader Greek economy."
The transaction is part of IFC's Distressed Asset Recovery Program (DARP), a strategic response to the high levels of non-performing loans that have built up in the aftermath of the global financial crisis.
Since its inception in 2007, the program has grown to a total commitment of $5.4 billion globally, including commitments of $2 billion on IFC's own account and co-investments from third-party investors of around $3.4 billion, making IFC a market leader in distressed asset acquisition and resolution in its countries of operation.