Hellenic Bank and APS sign an agreement to allow Hellenic Bank to obtain control of the board of directors of APS Debt Servicing Cyprus Limited, whilst APS will remain the majority shareholder and provide ongoing management expertise

10 August 2020

Hellenic Bank Public Company Ltd (the “Bank”) and APS Holding Cyprus Ltd (“APS”) (jointly the “Partners”) reached an agreement on the 7th of August 2020 to restructure the agreements entered into by the Partners in January 2017 in relation to the establishment of APS Debt Servicing Cyprus Ltd (“APS Cyprus” or the “Company”). The revised agreements amend the terms and conditions for the governance and operation of the Company going forward, allowing Hellenic Bank to take over the governance and operational control of the Company.

Both the Bank and APS see this transaction as a favourable step benefiting both parties. The overall transaction has been valued at €4,75 million and is expected to result to a c.€4 million accounting loss for the Bank during financial year 2020 albeit an insignificant impact on the Bank’s capital ratios.

The implementation of the revised agreements is subject to certain conditions precedent, including the receipt of custom regulatory and other approvals.

APS Cyprus has been providing non-performing loans servicing services to the Bank since 2017 and currently services a portfolio of NPLs and Real Estate Assets of c.€2,6 billion that consists of non-performing loan assets and real estate assets.

The conclusion of the revised agreements falls within the Bank’s strategy of non-core asset deleveraging and will allow the Bank to be in a position to quickly scale up both its outsourced debt servicing operations if required in the future.

APS’s representatives will continue to provide loan management and real estate expertise through their participation in the board of directors of the Company and by offering know how and expertise on an ongoing basis.

Yannis Matsis, CEO of Hellenic Bank, stated:

“After almost three and half years since the inception of this joint venture, the Company has established itself as the first fully independent debt servicing entity in Cyprus, building on the recovery and operational expertise contributed by APS. We are thankful to our partner for enabling the establishment of the Company and we will continue to work closely in the coming months. We believe that the Company is now fully operational and has successfully fulfilled the envisaged role anticipated at the inception of the original agreements. We have therefore agreed with our partner that the Bank can now take a more active role in the management of the Company which will allow the flexibility required to consider its NPA strategy for the future as well as independently consider any additional investments that may be required to address the enlarged portfolio being serviced by the Company as a result of the acquisition of the ex-Cyprus Cooperative Bank portfolio”.

Martin Machoň, CEO of APS Holdings, stated:

“Foundation of APS Debt Servicing Cyprus, the first distressed debt servicing platform in the country, demonstrated our high expertise, know-how and ability to come up with tailor-made approaches to specific markets. Now that the three and half years-long joint venture has matured we consider this a good opportunity to exit a very successful and profitable business, trusting that the Bank will benefit from the strong business foundation when implementing their next level of business strategy. The joint venture operation contributed to the initiation of a deleveraging process in the Cypriot market, leading to stronger and more resilient banks. As far as the APS Group is concerned, we remain committed in the region through our other ventures and companies, looking for new opportunities for our key business lines”.

Since January 2017 Hellenic Bank NPLs have reduced by over 50% from €2,5bn before accrued interest and new defaults, demonstrating the solid results of the Company and reconfirming that the strategy to externalise the management of the NPLs and REOs was the correct one and one that will remain in place for the foreseeable future. This significant NPL reduction was driven by mostly cash collections and reperformance of NPLs, comprising c.40% of total deleveraging. Recoveries from onboardings of real estate assets accounted for an additional 20% of total deleveraging.