Alpha Bank speeds up transformation plan

Alpha Bank is picking up the pace on implementing an ambitious plan to transform the lender that includes the Galaxy securitization, one of the biggest of its kind in Europe, the sale of loan management company Cepal and the hiving down of its basic lending business into a new subsidiary.

Alpha Bank chief executive is expected to highlight this today during the presentation of first-quarter results that will take place after the close of trade on the Athens bourse.

According to sources, three special purpose vehicles (SPV) were set up in Ireland a few days ago, to which different categories of non-performing loans were transferred, as part of the Galaxy plan. At the same time, the bank has taken the necessary steps to obtain the assessment needed to make use of the state guarantees under the Hercules bad debt plan.

Bank sources say that the pandemic has caused unprecedented turmoil in recent months, freezing deals, but the situation is improving with investor interest returning. The task of completing the deal by the end of the year is seen as being realistic.

At the same time, the implementation of the plan turning Cepal into the main loan servicer that will be transferred to the investor who acquires the Galaxy project is progressing rapidly. It is noted that the securitization will include loans with a nominal value of 12 billion euros. Work is underway to join Cepal's systems with those of Alpha Bank and to transfer the necessary staff, about 800 employees.

It is noted that the Cepal deal will include a condition stating that it will undertake Alpha Bank's future non-performing loans. The bank's transformation plan foresees replacing its bad loan management unit (which will be transferred to Cepal) with an NPL monitoring department. The management's goal is to complete all the pre-emptive actions within the year so that the new Cepal will be ready when transferred to the investor.

Finally, the implementation of the plan for the separation of its banking operations into a new subsidiary, which will be 100 percent owned by Alpha Bank, is in full swing.