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Eurobank unveils €3.3B 'Mexico' bad-loan securitization


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Eurobank unveils €3.3B 'Mexico' bad-loan securitization

Eurobank Ergasias Services and Holdings SA is launching a fresh €3.3 billion bad-loan securitization code-named "Mexico" as part of ongoing efforts to clean up its balance sheet, CEO Fokion Karavias told analysts during a presentation of the Greek bank's full-year 2020 results.

The deal, which involves a portfolio made up of 85% retail loans and 15% corporate, will reduce the bank's nonperforming exposure to 6.7% from 14%.

Eurobank finalized its flagship €7.5 billion bad-loan securitization dubbed "Cairo" in mid-2020.

On the topic of loan moratoriums granted during the coronavirus pandemic, Karavias said there were "encouraging" signs that the majority of borrowers would resume repayments.

"However, it is too early to draw any final conclusion," he said.

Like most other large banks in Europe, Eurobank gave a grace period to borrowers struggling to repay due to the economic hit of the pandemic.

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Of a total of €4.9 billion of loans under moratoriums, 42% had already returned to repayment and 20% were classified as "at risk," according to the company's earnings presentation.

Some 13% of loan moratoriums will not expire until later in 2021. Eurobank said in its third-quarter earnings call in November 2020 that it would extend loan holidays for borrowers in the tourism sector until the end of 2021.

Eurobank anticipates net inflows of bad loans of around €250 million in the first quarter of 2021 and €900 million for full-year 2021, Karavias said during the call.

Eurobank posted a net loss of €1.21 billion for full year 2020, compared with a net profit of €126.8 million for 2019. The bank's nonperforming loan ratio fell to 14.0% from 29.2% a year ago, while its common equity Tier 1 ratio stood at 13.9% at 2020-end, down from 16.7% at the end of 2019.