“The price of Frontier I is expected to fluctuate close to 50% of the book value of the loan portfolio," sources with knowledge of the proceedings tell Business Daily. NBG submitted last week for approval to the Ministry of Finance the first transaction to join Hercules II, with a total book value of 1 billion euros. The request was made in order to approve state guarantees for the senior tranche of 460 million euros.
In October last year, the Frontier I transaction was completed for 3 billion euros at 50% of the book value. The second transaction, which includes secured loans of large, small and medium-sized and small enterprises as well as housing and consumer loans, will be at the same or slightly lower levels, the same sources estimate.
NBG closed 2021 with an NPE ratio of 6.9% after the completion of Frontier I, a transaction totaling approximately 6 billion euros. With the completion of Frontier II, the bank's NPEs ratio will be close to 5% with the aim of being limited to 3% by 2024.
Eurostat and its objections
Regarding the objections raised by Eurostat on the state guarantees provided in the context of the Hercules I and Hercules II non-performing loan securitisation programmes, senior bank sources believe that the European authority has backed down - at least for the time being.
The same sources, however, express strong reservations about the correctness of Eurostat's claim, explaining that this is not the case, since, even if some state guarantees are triggered, they will concern 10-15% and not the total. Moreover, as they note, the deferred tax does not increase the public debt either- despite the fact that it is paid in total by the state when the relevant provision is activated due to the loss recorded by the credit institution that has been recapitalized with the participation of the state.
In any case, it seems that the European authority has retreated - for the time being at least, which means that the securitisations of Hercules II will move ahead and Frontier II will get the green light from the Ministry of Finance. This is the first securitisation submission that has taken place for some time in Hercules II, and the Sunrise 3 securitisations of Piraeus Bank and Solar, in which all systemic banks are participating, are still pending.
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