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Alpha Bank hails bad loan sale as breakthrough

Greece's third-largest bank by assets, Alpha Bank AE, is closer to its cleanup targets for 2018 following the sale of a bad loan portfolio with a face value of €3.7 billion, executives said on an earnings call March 20.

Norwegian debt recovery fund B2Holding ASA bought the unsecured loans package for a consideration of €90 million on March 14, or 2.43 cents on the euro.

Alpha Bank took a €64 million loss in the fourth quarter of 2017, leading to a full-year profit of €21.1 million, down from 2016's €42.1 million.

"For fiscal year 2017, we have delivered another profitable performance in line with our targets and our strategic objectives," said CFO Vassilios Psaltis. "This performance was also supported by our €3.7 billion unsecured-loan portfolio sales, which has concluded in the first quarter of 2018."

The deal, named Project Venus by the bank, consisted of consumer and small-business debt.

"The transaction ... is fully consistent with our business plan to reduce [nonperforming exposures, or NPEs,] and continue restoration of our balance sheet. It is also worth mentioning that this is the largest loan disposal transaction that so far has taken place in our country," the banker added.

Under the newly adopted accounting standard known as IFRS 9, the bank held €29 billion in NPEs, including some restructured loans, at the end of 2017, with provisions against these assets standing at €13.5 billion, or 47%.

The bank's NPEs as a proportion of overall loans was 51.7% at the end of 2017.

The ECB has set the firm's NPE target for the end of 2018 at €21.4 billion and at €16.8 billion for the end of 2019. Executives were confident that the targets would be reached through a combination of restructuring, curing of bad loans, writeoffs and further sales, in a Greek economy which grew by 1.4% in 2017 and is set to continue growing in 2018.

Alpha Bank is planning another sale of €82 million in nonperforming corporate loans to an as-yet-unnamed foreign institutional investor, according to its presentation.