Attica Bank: Innovative Approach To De-Risking
Edison | Nov 06, 2018 02:05AM ET
Through innovative securitisations, Attica Bank SA (AT:BOAr) has de-risked its portfolio, reducing net impaired loans from over 250% to just 79% of net tangible assets incorporating the gain on the Metexelixis transaction. This will also lift the common equity Tier 1 (CET1) ratio of 12.8% to 14.3%, representing significant headroom over regulatory requirements. Management will now move on to the next stage of recovery, shifting the group’s focus to the small and medium-sized enterprise (SME) market and raising profitability to improve the price/net tangible asset ratio, estimated at just 0.14x.
Balance sheet clean-up
Attica has significantly de-risked its portfolio with two securitisations so that impaired loans have reduced from €2.4bn (end-2016) to c €590m (or c €370m net of provisions. Attica transferred some €2bn of non-performing loans (NPLs) into two special purpose vehicles (SPVs), which then issued junior and senior notes to Attica. Subsequently, Aldridge EDC Speciality Finance and PIMCO, the distressed debt managers, paid a premium to acquire the junior notes. Attica is still at risk on the senior notes, but is protected by over-collateralisation and its position in the debt hierarchy. Although its capital raise in Q218 was only 44.9% subscribed, we estimate that the capital gains on the most recent securitisation deal will allow the bank’s CET1 ratio to reach 14.3%, or 11.2% including full phasing of IFRS 9.
To read the entire report Please click on the pdf File Below..
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.