Alpha Bank applies to join Greece's Hercules bad loan scheme

Credit: REUTERS/YIANNIS KOURTOGLOU

Alpha Bank, one of Greece's four largest lenders, has applied to take part in the government's Hercules bad loan reduction scheme via two securitisations totalling 7.6 billion euros ($9 billion), the finance ministry said on Wednesday.

ATHENS, Aug 5 (Reuters - Alpha Bank, one of Greece's four largest lenders, has applied to take part in the government's Hercules bad loan reduction scheme via two securitisations totalling 7.6 billion euros ($9 billion), the finance ministry said on Wednesday.

Banks in Greece have been working to reduce a pile of about 70 billion euros in bad loans, a legacy of a financial crisis that shrank the country's economy by a quarter. Shedding the bad debt is crucial for their ability to lend and shore up profits.

The Hercules asset protection scheme (HAPS) was put in place to help the banks offload up to 30 billion euros of bad loans.

Alpha will be the second Greek bank to apply for a government guarantee under the Hercules (HAPS) non-performing loan (NPL) securitisation programme after peer Eurobank EURBr.AT.

Alpha will seek to securitise two loan portfolios - Galaxy and Orion.

Under Hercules, banks can apply for a government guarantee on the senior tranche of an NPL securitisation as long as that tranche is structured to a minimum Double B minus credit rating and they sell the majority of the mezzanine and junior notes.

The guarantee would give the senior notes a zero risk-weighting.

($1 = 0.8405 euros)

(Reporting by George Georgiopoulos; Editing by David Evans)

((george.georgiopoulos@thomsonreuters.com; +30210 337 6437; Reuters Messaging: george.georgiopoulos.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More