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National Bank works on Frontier 2 project, eyes further drop in NPLs in 2021

With Frontier 2, further actions from management in 2022 and the increase of bank lending, it is estimated that National Bank’s bad debts index will be close to 3 percent, ie close to the average of the eurozone banks, by the end of 2022.

National Bank (NBG) is picking up the pace in efforts to reduce non-performing loans, moving immediately after Frontier with a new transaction, Frontier 2, totaling 1.5 billion euros.

The bank's goal is for the new transaction to take place within 2021, achieving through this the further reduction of the non-performing credit exposure ratio (NPEs) from 13.6 percent currently to 6-7 percent by the end of the year.

According to Business Daily sources, Frontier 2 will include problem loans amounting to about 1.5 billion euros, while bank officials are weighing up a number of alternatives to finalize the structure of the new transaction. With Frontier 2, the bank is decisively accelerating the pace of consolidating its balance sheet, achieving a single-digit index of NPEs, and in fact, much lower than the 10 percent level, to 6-7 percent in 2021.

With Frontier 2, further actions from management in 2022 and the increase of bank lending, it is estimated that National Bank’s bad debts index will be close to 3 percent, ie close to the average of the eurozone banks, by the end of 2022.

Dramatic reduction

With the classification of the Frontier portfolio in 2020 as an asset intended for sale, the bank reduced its NPE index to 13.6 percent from 29.3 percent at the end of September 2020.

The non-performing loans of NBG in Greece decreased in 2020 by two thirds to 4.3 billion euros from 10.8 billion euros at the end of 2019. The total reduction reached 6.5 billion euros as a result mainly of Frontier.

It is recalled that the Frontier project includes about 190,000 loans totaling 6.1 billion euros. Of these, 77 percent ie 4.7 billion euros, relate to mortgage loans, 18 percent or 1.1 billion euros, small business loans and the remaining 5 percent relate to consumer loans.

Four investors, who have submitted non-binding offers, have expressed interest in the Frontier securitization. They are doValue - Fortress - Bain Capital, Pimco - Quant, Intrum and DK Cepal, while by the end of the month they are expected to submit binding offers.

It is noted that the high profits accounted for in 2020 by the bank from financial transactions totaling 1.1 billion euros fully absorbed the non-recurring forecasts related to the coronavirus pandemic, the Frontier securitization, as well as the additional impairment as a result of its sale agreement with National Insurance.

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