Romania’s BCR plans to sell NPL bundle worth over €1bn

By bne IntelliNews January 21, 2016

Romania’s BCR, part of Erste Group, will continue to sell non-performing loans (NPL) in the amount of over €1bn, Jozef Sikela, an Erste board member, said, quoted by Ziarul Financiar daily. After this, the Romanian bank can focus on business expansion and lending, Sikela explained.

Sikela refused to disclose the exact size of the NPL bundle to be sold.

Bundles of NPLs sold by BCR can include, in principle, loans from BCR’s portfolio both on its balance sheets and also transferred to the group’s entities abroad.

BCR sold a €1.2bn NPL bundle to a consortium formed by Deutsche Bank, International Financial Corporation and debt recovery firm APC at the end of last year. The discount was around 90%, according to unofficial sources.

The sale was a key move for the bank’s strategy of managing its NPL portfolio. The bank’s NPL ratio decreased by some 5pp following the deal, the bank announced.

BCR’s NPL problem, despite recent improvements, remains serious and the bank’s recent profitability remains at risk due to future expected loan impairment costs, Fitch rating agency commented in October, when it upgraded its Viability Rating (VR) to bb- from b+.

At the end of September, BCR’s portfolio of loans was RON32,2bn, with the NPL ratio at 22.2%.

Local media reported in mid-May 2015 that BCR was preparing to sell a massive €3.6bn NPL bundle, including bad loans from its own portfolio and others already transferred to other Erste Bank entities. The bundle included loans in BCR’s portfolio as well as off-balance sheet loans, some of which had been transferred to Erste Bank Group in Vienna. The size of the bundle was equivalent to 2.4% of Romania's GDP, twice the volume of NPLs on BCR’s balance sheet or half of the total stock of outstanding loans to non-financial customers.

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