Greece's NBG hires Morgan Stanley to advise on 6bn euro bad debt sale

ATHENS: Greece's National Bank (NBG) has hired Morgan Stanley as an adviser ahead of a planned sale of more than 6.0 billion euros ($6.73 billion) of non-performing credit, part of its balance sheet clean-up efforts, bankers close to the transaction said on Tuesday.

NBG, Greece's second-largest lender by assets, is aiming to begin talks with potential investors about offloading a portfolio of soured loans known as project Frontier in the second half of the year, they added.

The bank said on Tuesday that on completion of the sale, which will involve a securitisation, its non-performing exposures (NPE) ratio would fall to below 15% from 30.9% at the end of the first quarter. That compares with a target of 5% based on a four-year business plan, which also aims for an 11% return on equity.

Alpha Bank and Piraeus Bank have also jump started efforts to dispose of non-performing loans after the coronavirus crisis paused the process.

NBG's Frontier portfolio comprises more than 6.0 billion euros of mostly non-performing mortgages along with small and medium-sized business loans and some consumer loans.

NBG will be left with around 4.0 billion euros of NPEs, the bankers said.

NBG and Morgan Stanley were not immediately available for comment.

"Offloading the Frontier portfolio will leave the bank with non-performing business and home loans that could be worked out," one banker said.

Under the steer of CEO Paul Mylonas, the bank has reduced its bad credit by one third, from 15 billion euros at the end of 2018 to 10 billion through sales and restructuring of loans.

It disposed of 1.6 billion euros of non-performing corporate loans to Bain Capital Credit last month.