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Bucharest, Romania, May 23, 2016
—IFC, a member of the World Bank Group, and KRUK, a leading debt collection company in Central and Eastern Europe, have agreed to purchase a portfolio of non-performing loans (NPLs) from Bancpost and other subsidiaries of the Eurobank Group in Romania, to help speed up the resolution of NPLs and increase the liquidity of the banking sector in Romania and the region.
The large number of NPLs in Romania and the region has been a serious problem since the 2008 global financial crisis. IFC and KRUK have committed to investing in a portfolio of unsecured retail NPLs originated by Bancpost and other subsidiaries of the Eurobank Group in Romania, with an outstanding total balance of approximately €597 million.
“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,” said Stavros Ioannou, Deputy CEO of Eurobank. “This transaction is yet another example of the Group’s efforts to lower its NPL ratios, reduce the relevant servicing cost, and transact with strong market participants in terms compatible with the value-creating strategy of the Group.”
The transaction is part of IFC’s Debt and Asset Recovery Program (DARP), a strategic response to increasing levels of NPLs. Globally, DARP focuses on the acquisition and resolution of NPLs and the restructuring of small and medium enterprises. To date, IFC has invested $1.4 billion globally from its own account and mobilized an additional $3.5 billion from other investors, which has allowed financial institutions to off-load $30 billion-worth of NPLs.
“This is one of the largest retail NPL transactions in Romania to date and an important step towards resolving the rising level of NPLs. Through this transaction, IFC is also supporting the Eurobank’s consolidated balance sheet,” said Manuel Reyes-Retana, IFC Regional Head for Financial Institutions Group in Europe, Middle East and North Africa. “By mobilizing funding from the private sector to resolve NPLs, we are increasing the liquidity of local banks and ensuring a continued flow of funds to companies and people who need it.”
The overarching goal of the World Bank Group’s Country Partnership Strategy for Romania is to accelerate the country’s convergence with the European Union by helping to revive economic growth, reduce poverty at a faster pace, and sustain income growth for the bottom 40 percent of the population. Strengthening the local financial system by helping banks reduce their NPLs is a strategic priority.
“Today’s agreement will advance our organization into a higher league of the world’s leading financial players. This is a special moment for the whole team working on this transaction – we have just became a valuable partner for the biggest international institutions, such as IFC. The current transaction means that, cumulatively this year, we will exceed our record-high annual investments amount in Romania,” said Piotr Krupa, CEO of KRUK S.A.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org
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About KRUK
KRUK is the biggest Polish debt collection company, purchasing and servicing debt portfolios in seven markets: Poland, Romania, Czech Republic, Slovakia, Germany, Italy, and Spain. Since the beginning of operations, the company has purchased portfolios with a total nominal value of PLN 27.0bn (EUR 6.5bn). KRUK S.A. is listed on the Warsaw Stock Exchange. Consolidated revenue of the KRUK Group in 2015 equaled PLN 611m.
To learn more about KRUK, please visit
www.en.kruk.eu
About Eurobank
Eurobank group is a dynamic banking group active in eight countries, with total assets of €72.9 billion and c. 17.000 employees. With a total network of over 970 branches in Greece and abroad, the Group offers a comprehensive range of financial products and services to its retail and corporate customers. In Greece, Eurobank is one of the four pillars of the banking system. With two distinct retail branch networks, the Eurobank Network and the New TT Branch Network, business specialized centers, a dedicated private banking network and electronic service channels, the Group’s philosophy focuses on high quality services to its clientele. The Group also holds a strategic position in retail and business banking in Bulgaria, Romania and Serbia, offers distinguished Wealth Management services in Cyprus, Luxembourg and London and is also present in Ukraine. Ôo learn more about Eurobank group, please visit
www.eurobank.gr
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