By mid-January, Attica Bank management is expected to finalize a plan to reduce the bank’s bad loans, which amount to approximately 2.5 billion euros (approximately 65% ​​of its portfolio), in order to then begin developing a capital increase of 490 million euros.

The strategic plan to reduce non-performing loans must be approved by the Bank of Greece and will form an integral part of the AMK’s prospectus, which received the approval of the bank’s general meeting of shareholders last Friday and is due to be completed within the first 4 months of 2023.

It is envisaged to reduce overdue loans by about 2.5 billion by 50%.

According to K’s information, the bank’s plan to consolidate from an insignificant – in relation to its balance sheet – amount of bad loans provides for a gradual – over the next 3 years – reduction of NPE by about half through sales and more aggressive management, combined with an increase in the bank’s informed portfolio . In any case, according to statements by the managing director of Attica Bank in the context of the general meeting, “the consolidation should be final and lead to the complete derecognition of problem loans from the bank’s balance sheet.”

Of note, one of the main concerns is the €1.3bn Omega portfolio, which was securitized with investor Ellington, who bought 95% of the €70m and €585m mezzanine and junior bonds issued, respectively. however, this portfolio no longer qualifies for its derecognition from Attica Bank’s balance sheet, while, accordingly, the senior issued bond of €630 million remains on the bank’s books. The Omega portfolio was taken over by Thea Artemis, also owned by Ellington. The picture seems more plausible for the €320m and €370m Astir I and II portfolios, respectively, which were planned to be included in Hercules but never materialized, and for which the bank reportedly received interest on their sale. . The strategic plan will also include alternatives to the €670m Metexelixis portfolio, which was securitized in 2018 with investor Pimco and manager Qquant, who also manages Astir-branded portfolios. The bank has appointed Pepper, UBS and Euroxx to evaluate securitized red loans in order to select the appropriate instruments to use in the near term, and according to management sources, the goal is to resolve the issue. comprehensively so that the plan also receives the approval of the Board of Governors.

As announced, the solution to the problem of bad loans will absorb a significant part of the increase in the authorized capital, which is estimated at about 300 million euros in the form of reserves, while the remaining amount will be directed to the implementation of the business plan and, of course, the restoration of Attica Bank’s capital adequacy ratios. which fell to 6.3% and 10.01% based on the 9-month results announced by the bank last week. The IPO will be conducted through a public offering with a preference to existing shareholders, a process that will cover a total capital increase of €490 million and is estimated to increase CET1, Tier 1 and CAD by approximately by 18 percentage points.