Eurobank applies to join Greek bad loan program Hercules


ATHENS, Feb 25 (Reuters) – Eurobank has applied to participate in Greece’s Hercules program to reduce non-performing loans via a 7.5 billion euro ($8.14 billion) securitization, the third largest said Bank of the country with.

Banks in Greece have been working to reduce a mountain of about 75 billion euros in bad loans, a legacy of a financial crisis that shrank the country’s economy by a quarter. Bad debt elimination is critical to their ability to extend credit and secure profits.

The Hercules Asset Protection Scheme (HAPS) was set up to help banks shed up to €30 billion of bad loans.

Similar to the Italian GACS model, the system was created to help lenders clean up balance sheets and offload bad debts by converting the bundles of bad loans into asset-backed securities that can be sold to investors.

Eurobank said it had filed two opt-in requests for Hercules with two securitizations called Cairo I and II with the country’s Treasury Department.

“The applications relate to the provision by the Greek State of a guarantee for senior debt totaling 1.655 billion,” the bank said. An application for Cairo III will follow in the coming weeks, it said.

Overall, Cairo consists of three securitizations of different sizes and different types of credit claims.

The Eurobank aims to reduce its non-performing loan ratio to 15% in the first quarter.

$1 = 0.9211 euros Report by George Georgiopoulos. Editing by Jane Merriman


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