It is frequently stated by parties in the Hellenic Parliament that behind the shell companies in Ireland where NPL funds hide, certain law firms in Greece doing the dirty work, and the banks, lie common legal entities attempting to recover whatever they can from the 78 billion euros in non-performing loans, while Greek banks were recapitalized with 42 billion euros in state funds and received total support that also included covering the funding gaps of bad banks (ATEbank, Hellenic Postbank, among others)...
Is there truly a connection?
It is well known that the companies doValue, Cepal, and Intrum were established with employees from banks: doValue with staff from Eurobank, Intrum from Piraeus Bank, and Cepal from Alpha Bank.
These facts have been known for years.
It is also well known that the executive management of the NPE servicing companies originates from the banks.
Furthermore, in terms of legal entities, an interconnection exists, either through funds registered abroad or through issued bonds, particularly senior and mezzanine bonds, namely high-credit and medium-credit securities.
All of this has also been known for years.
Cumulative profits of 670 million euros
In total, the three main NPE management companies, doValue, Cepal, and Intrum, have generated cumulative profits exceeding 670 million euros over all these years while managing 78 billion euros in NPEs.
We must take into account that NPE servicers and banks are not the same legal entity; anyone claiming otherwise is mistaken.
Banks, for example, hold minority stakes, such as Eurobank holding a 20% stake in doValue, but this does not mean it controls the company.
Of course, banks can profit in two ways: either by purchasing cured performing loans at preferential prices, or through joint commercial exploitation between banks and NPE servicers of real estate properties mortgaged and seized by the NPE servicing companies...
Some bitter and raw truths
1) Banks made almost nothing from servicing profits; in total, no more than 120 to 140 million euros have been generated from an NPE portfolio of 78 billion euros.
2) Banks pay interest on bonds but make profits from real estate...
We observe that NPE servicers, NPL funds, law firms, and certainly banks are focusing on real estate and creating large property portfolios; money is made here, but relative to total profits of 4.7 billion euros, it is negligible.
3) Certain law firms do dirtier work than the NPL funds.
Care is needed here.
Companies in Ireland are one thing, these are shell entities, and investment funds such as Fortress, which buys non-performing NPEs, are another.
4) It is true that transparency is lacking, and this fuels suspicion regarding underground dealings.
Even in mezzanine notes traded on the Athens Exchange, a murky regime prevails that does not align with stock exchange transparency.
5) Banks, to be truthful, devised this entire setup, engineering it masterfully so that society would not curse the banks, but rather faceless NPL funds whose registered addresses are post office boxes in Ireland.
At the same time, they wanted to maintain control over the entire setup, and this was achieved through parallel legal entities connected to each other, even through minority shareholding stakes.
6) We have stated many times that it is inconceivable, for instance, for a consumer loan of 10,000 euros that turned into a non-performing loan to be sold to a fund for 1,000 euros or 10% of nominal value, without the borrower having the opportunity to purchase the loan, meaning to settle it for 1,000 euros.
Instead, and provocatively, they demand that the borrower pay the full 10,000 euros.
This is called fraud and a scheme.
7) Certain law firms have entered the NPE racket and play the dirtiest role, worse than the NPL funds.
All the dirty work is carried out by Greek law firms that have abandoned other casework to deal exclusively with non-performing loans... some of them are indeed very dirty.
8) The NPL funds, NPE servicers, and banks expected during the economic recovery that substantial profit would arise from non-performing loans, having estimated that many would become performing.
That plan did not work out for them...
Yet let us be realistic, citizens must pay for non-performing loans, but we completely disagree with the fact that funds exist (some funds being Greek law firms) that purchase debt at 10% or 20% of nominal value while the borrower is denied that same right.
There are another five bitter truths, but they bring lawsuits and legal action...
For now, we will keep them to ourselves.
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