Following the granting of an operating license by the Bank of Greece to Pillarstone to manage non-performing exposures in Greece, the EBRD has signed an agreement to take a 5 per cent share in Pillarstone Greece.
Pillarstone was established by KKR Credit with the purpose of managing and restructuring under-performing exposures by involving the underlying borrowers and turnaround experts. Under the project a selected number of credit exposures currently held by Eurobank and Alpha Bank, two of the largest Greek banks, will be assigned for management by Pillarstone Greece. The EBRD will further provide up to €50 million for the restructuring of designated exposures.
Resolving the issue of non-performing loans is crucial for the recovery of the Greek economy. The platform will provide fresh long-term capital and operational expertise to large Greek corporate borrowers, helping them to stabilise, recover and grow for the benefit of all stakeholders.
This is a pioneering platform, both in terms of scope and scale, and also has the flexibility to allow other lenders to participate by contributing loan portfolios or adding existing exposures to a specific company to those of the other banks.
Noel Edison, EBRD Director for Insurance and Financial Services, said: “This is the next step towards financial stability in Greece and it is a hugely important one. A more effective management of under-performing exposures is crucial for banks’ capacity to focus on their normal operations and provide credit to the real economy. The platform will provide corporates in financial difficulty with new financing and turnaround operational expertise, which are prerequisites to unlocking the inter-creditor impasse and supporting growth in the real economy.”
John Davison, CEO at Pillarstone, added: “The Pillarstone solution offers real benefits to Greek businesses and banks. By working closely with management teams and bank restructuring groups, we can help troubled businesses stabilise, recover and grow while also creating value for the banks and for the Greek economy. We are very pleased to have partnered with the EBRD for our activities in Greece. The insights the team can bring and their level of existing local engagement will provide a strong network of support as we build our activity in the region.”
The news of the licence was made public at the 2017 EBRD Annual Meeting and Business Forum in Nicosia this week. As part of the programme Greece presented prospects for investors in a well-attended session on Wednesday which was attended by the Minister of Economic Development, Dimitri Papadimitriou.
The EBRD started investing in Greece in 2015 on a temporary basis with the goal of supporting the country’s recovery from its current economic crisis. The Bank’s aim is to encourage foreign and domestic investment, strengthen the role of the private sector and deepen regional integration. To date, the EBRD has invested about €1 billion in Greece with projects in the financial sector, infrastructure and renewable energy, among others.