Alpha Bank, the largest Greek lender with a market cap of €2.13 billion, had handpicked a New York City-headquartered investment fund Davidson Kempner Capital Management as its preferred bidder for sales of a jawdropping $12 billion in bad debts, petering out an offer by Davidson Kempner rival Pacific Investment Management company (PIMCO), people familiar with the matter had revealed over the weekend on condition of anonymity given the sensitive nature of the issue.
In point of fact, in what could be the beleaguered eurozone country’s largest ever sales of bad debts, the €10.8 billion deal would also include a cleansing of Alpha Bank’s bad loan servicing unit, called as Cepal.
More interestingly, although small-scale sales of bad debts in order to rub out a lender’s balance sheet are widely seen from time-to-time in a fiscal year, yet a sale of bad debts of such scale appears highly unusual.
Alpha picks Davidson Kempner over PIMCO for sales of $12bn in bad debts
If truth is to be told, latest move from Alpha Bank, the Athens-headquartered second-largest Greek Bank by assets and the largest by market cap with a valuation of €2.13 billion to date, had been pointing towards a perilous upsurge in bad debts over the coming months, in part due to the fiscal fallouts of the pandemic resurgence which had begun to rampage parts of Eurozone economy, while the US investment fund Davidson Kempner Capital Management had valued the assets to be sold at an approximated €290 million.
Besides, people familiar with the bidding process had also added that a deal could be announced as early as next week, while Alpha Bank had been planning to conclude the sales by end-2020.
In actuality, Alpha had begun the bidding process for sales of its $12 billion in bad debts shortly after the onset of the pandemic outbreak which initially had drawn interests from a barrage of bidders including the Italian big-league firms such as Cerved alongside Credito Fondiaro.
Nonetheless, only Davidson Kempner and PIMCO were able to make it through to the final stage of the bidding process with Alpha’s management board picking Davidson Kempner as its preferred bidder following a board meeting on Friday, said the sources.