According to the results of a recent Octane study on the Greek NPLs market, Greece still has the highest NPL rate in the European Union, at 3.3% compared to an average of 1.9% by Q2 2023.

HERCULES PROJECT

However, in recent years there have been significant efforts to reduce them through portfolio sales and securitizations, such as the Hercules project. - From 2021 to September 2023, 44+ NPL transactions with a total value of more than €65bn were executed, providing new market momentum - The return of regulated loans to banks and the economy is expected to play a key role in the 2024-2025 period - Servicers in the Greek market manage assets worth around €100bn, with improved capabilities due to regulatory developments - To date, 18 servicers have received renewed or extended licenses pending finalisation of the requirements for their re-licensing and 5 companies did not proceed with the re-licensing process by June 2024, which leaves their portfolios to be taken over by other entities 

FUNDS & INVESTORS

Investors and funds alike have the opportunity to benefit from the increased value of successfully reperforming loans through sale, thereby realizing gains on their original investments. Freed from reperforming loans, they can reduce their exposure to credit risk, especially if the economic outlook is uncertain.

THE BENEFITS FOR BANKS 

• New interest income stream, contributing positively to their profits. In this context, they can acquire these loans at prices reflecting their risk-adjusted returns, which may be favourable compared to issuing new loans
• By repurchasing recurring loans, banks can re-establish or strengthen their relationships with borrowers who have successfully restructured their debts, potentially opening up cross-selling opportunities for other banking products and services -
• Increased and improved restructuring options