Greek lender Alpha Bank has announced plans to launch a €12 bn securitisation of soured loans under the code name Project Galaxy.
The bank this week confirmed earlier reports that it will launch one of the largest securitisations in the European market this year, as it unveiled a strategy update for the next three years. It is expected to more than halve the group’s non performing exposures (NPEs) from 44% to about 20%.
As part of the securitisation, the lender will issue senior, mezzanine and junior notes, holding the senior tranche and selling 95% of the other two tranches to investors. Together with the NPL portfolio, Alpha Bank will also divest its in-house NPE management platform. The services unit will first be merged with Cepal Hellas, the largest third-party servicer in the country largely owned by Centerbridge, then sold to investors participating in the Project Galaxy process under the name New Cepal.
Although it is not clear yet what the percentage of property-backed loans in the Galaxy portfolio will be, experts believe that Alpha Bank's remaining NPEs largely consist of the more granular residential mortage loans as opposed to the unsecured and larger secured facilities which were sold first by the lender.
Alpha Bank is also believed to have incorporated Project Orion into Galaxy. Orion - a €1.9 bn pool of non-performing mortgage loans – received non-binding offers in early September from several parties including Lone Star, Bain Capital and Pimco. The portfolio includes some 36,000 loans to 19,000 borrowers with 40% of mortgage properties located in Athens.
The Greek lender also said that it aims to include Galaxy in the recently-approved Hercules asset protection scheme, with plans to obtain a state guarantee for €3.7 bn of the €12 bn NPL package early next year.
‘We are embarking today on a comprehensive transformation plan, designed to leave the financial crisis behind us by dealing decisively with legacy asset quality issues and by improving significantly our profitability going forward,’ said Alpha Bank’s CEO Vassilios Psaltis. ‘The confidence we have in the prospects of the Greek economy, coupled with the comfortable capital buffers we enjoy, allow us to launch a landmark €12 bn NPE securitization that will fully utilize the Greek Government’s initiative to set up an Asset Protection Scheme.’
The accelerated balance-sheet clean-up will also allow Alpha Bank to re-focus on its core operations and underwrite new business. The Greek lender plans to generate €14 bn of new loans by 2022 with a focus on six sectors including infrastructure, real estate and hospitality.