Alpha Bank – Cosmos deal of 3.4 billion NPEs closed

Alpha Bank and Davidson Kempner signed a binding agreement for the Cosmos transaction, through which it will de-recognize red loans (NPE) amounting to 3.4 billion euros, while submitting an application for the inclusion of the securitization in the state guarantees scheme “Herakles ΙΙ ».

As announced on Friday morning, the transaction is expected to be completed in the fourth quarter of 2021, contributing significantly to the implementation of the consolidation program of the systemic group.

In particular, together with the forthcoming sales of non-performing loan packages of Orbit in Greece and Sky in Cyprus, totaling 3.50 billion euros, Alpha Bank in the results of the year 2021 will reduce in real terms the NPE to the level of 5 billion euro from 21 billion euros a year earlier and the relevant group index to 13% from 43% respectively.

The Cosmos transaction

The package includes 50% mortgage loans, 21% small business loans, 18% large business loans and 11% consumer loans.

The agreement with the companies managed and consulted by Davidson Kempner, provides for the sale of 51% of the medium (Mezzanine) and low (Junior) bonds of the securitization priority.

The Bank will hold 100% of the Senior repayment bonds, with a total value of 1.7 billion euros, which will be included in “Herakles”, as well as 5% of the medium (Mezzanine) and low (Junior) repayment bonds. priority.

It is recalled that Alpha Bank is already cooperating with the American company, as after the completion of the Galaxy transaction, the latter has acquired control of its former subsidiary of the Greek bank, Cepal Hellas and the exclusive management of its red loans

Bank revenues

The total income of the systemic group from the sale of 51% of the medium and low repayment bonds of Cosmos, together with the value of the high repayment bonds, correspond to approximately 50% of the gross book value of the loan portfolio.

In terms of total capital adequacy, the transaction is expected to be neutral. This is because the additional burden on the results of 0.3 billion euros, which moves within the framework of the targets set by the Group for non-performing loan transactions, is offset by a corresponding reduction in weighted assets.

The completion of the Cosmos Transaction is expected to take place within the fourth quarter of 2021, subject to the fulfillment of certain conditions.

These include the issuance of a ministerial decision for the provision of the guarantee through “Herakles” for the bonds of high (Senior) repayment priority and the supervisory approval for the significant risk transfer (“SRT”) of the underlying loan portfolio by the Single Supervisory  Mechanism («SSM»).

The systemic group will then contribute 44% of the Mezzanine and Junior bonds of the Galaxy and Cosmos securities to a subsidiary that will establish and distribute in kind the latter’s shares to its shareholders.