May 23 (SeeNews) - The International Finance Corporation (IFC) and Polish debt collection company KRUK have agreed to purchase a 597 million euro ($669 million) portfolio of non-performing loans (NPLs) from Bancpost and other subsidiaries of Greece's Eurobank Group in Romania.
The move is aimed to help speed up the resolution of NPLs and increase the liquidity of the banking sector in Romania and the region, IFC said in a press release on Monday.
In Romania, apart from Bancpost, Eurobank owns several financing, leasing, insurance and real estate companies.
“Active management of the NPL stock is our strategic priority. To do this, we have been exploring and engaging in several de-risking initiatives aimed at further strengthening our consolidated balance-sheet as well as those of our affiliate banks and enhancing their profitability,” Eurobank deputy CEO Stavros Ioannou said.
"This is one of the largest retail NPL transactions in Romania to date and an important step towards resolving the rising level of NPLs,” IFC regional head Manuel Reyes-Retana said.
The NPLs ratio in Romania's banking system stood at 13.61% as of end-December 2015, down from 20.71% a year earlier, according to central bank data.
"The current transaction means that, cumulatively this year, we will exceed our record-high annual investments amount in Romania,” KRUK's CEO Piotr Krupa said.
The transaction is part of IFC’s Debt and Asset Recovery Program (DARP), which focuses on the acquisition and resolution of NPLs and the restructuring of small and medium enterprises.
Eurobank group is active in eight countries, with total assets of 72.9 billion euro and 17,000 employees.
In Romania, it owns Bancpost, which it bought in 2003, ERB Leasing IFN, Eurobank Property Services, ERB Retail Services, Eurolife ERB Life Insurance and Eurolife ERB General Insurance.
Bancposted a net profit of 19 million lei ($4.7 million/4.2 million euro) in the first quarter of 2016, down 33% from the same period of last year. In 2015, it turned to a profit of 35.2 million lei, recovering from 268 million lei loss a year earlier.
IFC is a member of the World Bank Group, and is focused on the private sector in emerging markets. To date, it has invested $1.4 billion globally and mobilized an additional $3.5 billion from other investors, which has allowed financial institutions to off-load $30 billion-worth of NPLs, it said.
KRUK is a Polish debt collection company, purchasing and servicing debt portfolios in seven markets: Poland, Romania, Czech Republic, Slovakia, Germany, Italy, and Spain.
(1 euro = 4.5194 Romanian lei)