“The deal is a major step in BCR’s strategy to speed up resolution of the non-performing loan portfolio,” BCR said in a statement on Wednesday evening.
“At the same time it significantly improves the liquidity of the bank and will allow BCR to mobilize capital towards its priority economic role: expanding financial intermediation in Romania, start new financing deals and support healthy economic growth. As a result of the deal, BCR expects non-performing loan ratio to drop by about 5%.”
Market sources say the discount in the sale of such a portfolio stood at about 90%.
Law firm Schoenherr assisted BCR in the deal, while Tuca, Zbarcea si Asociatii assisted the buyers.
Deutsche Bank, IFC and APS are traditional buyers of BCR’s NPL sets. Deutsche and IFC provide the funding for the deal, while APS, the Bucharest subsidiary of a Czech debt collection specialist, handles servicing and recovery of the NPLs.
BCR started 2015 by putting up for sale a set of NPLs with a face value of EUR3.5 billion in one go, but the deal fell through because the price private equity firm Lone Star offered was lower than Erste, BCR’s owner, had expected. The interesting thing is that Deutsche Bank was not selected in the final round of talks over this NPL set.
After the deal fell through, Erste-BCR decided to break it up into smaller chunks and talks with Deutsche Bank resumed in the final months of the year. APS, which will handle collection of the NPLs had teamed up with Lone Star in the summer.
The EUR1.2 billion set of NPLs sold is the largest in Romania and will serve as a benchmark for other deals.
UniCredit Tiriac sold EUR340 million NPLs to Kredyt Inkaso last week.
BCR sold two sets of NPLs last year, a EUR300 million one for EUR30 million and a EUR400 million one for about EUR28 million.
BCR was the lender that suffered the most as a result of the crisis, which drove companies into insolvency and caused consumers to default on their loans. One third of its portfolio had turned sour by early 2014 and the lender came under increased pressure from Romania’s central bank to do something about it.
(English version by Loredana Fratila-Cristescu)