KKR to Manage Two Greek Banks' Problem Loans
May 17 2016 - 7:10AM
Dow Jones News
ATHENS—KKR & Co. has signed an agreement with two of
Greece's leading banks to manage up to €1.2 billion ($1.35 billion)
of their problem loans, the latest effort by the struggling Greek
banking sector to restructure bad debts festering on their balance
sheets.
The U.S.-based private equity group said in a statement it will
help manage underperforming assets owned by Alpha Bank and
Eurobank, Greece's third and fourth largest lenders respectively,
via its platform, known as Pillarstone.
Pillarstone, which was launched in Italy last year, is also
evaluating opportunities to expand the platform in other European
countries in the near-term, KKR said.
Greek banks have been reticent to sell nonperforming loans
directly to private equity groups. Greek bank executives argue that
many of the large corporate loans simply need to be restructured
and should not be sold off at a loss to third parties. The KKR
platform offers a way round that problem, effectively tasking the
private equity group with restructuring loans. The banks and KKR
will provide capital. Once they are performing again, they can be
returned to the Greek banks' balance sheets.
"The new platform in Greece will provide fresh long-term capital
and operational expertise to large Greek corporate borrowers,
helping them stabilize, recover and grow for the benefit of all
stakeholders," it said in a statement.
More loans from Greek banks may be added to the portfolio of
loans to be managed by this joint effort amid a push from local
lenders to improve the management of underperforming loans. Greek
banks will share in any gains brought on by Pillarstone as they
wrestle with a massive pile of nonperforming assets amounting to
nearly one in two loans, or about €100 billion.
KKR has already rolled out a similar system in Italy. Three
banks, Banca Carige, Intesa Sanpaolo SpA and UniCredit SpA are
already using the platform. KKR had previously tried to do a
similar deal with Piraeus, Greece's largest bank, back in 2014, but
the deal collapsed.
Greece is stumbling through its seventh year of an economic
slump that has wiped more than a quarter of its economic output and
sent unemployment levels to around 25%.
The new asset-management company is being set up as part of
reforms to the sector passed by Greek lawmakers late last year that
allow for more efficient management of delayed loans. The European
Bank for Reconstruction and Development is considering co-investing
in partnership with KKR and the banks, the lenders added.
Write to Stelios Bouras at stelios.bouras@wsj.com and Max
Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
May 17, 2016 06:55 ET (10:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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