Bank of Cyprus Sells €2.7 Billion Bad Loans to Apollo

Bank of Cyprus has struck a deal to sell a €2.7bn non-performing loan portfolio in a “transformative” deal for the bank that was one of the highest-profile casualties of the eurozone crisis, the Financial Times reported. The agreement to sell the loan portfolio to Apollo Global, the US-based private equity firm, for €1.4bn comes as European banks have ramped up sales of bad loans following pressure from the ECB to clean up balance sheets. Changes to accounting rules, which allow banks to take extra provisions on bad loans without having to raise fresh capital, have also provided fresh impetus to lenders to sell toxic loans in some of the hardest-hit countries such as Greece and Italy. “This is a transformative sale for the Bank”, said chief executive John Patrick Hourican. “Since 2014, we have focused on decreasing our stock of non-performing loans and improving the asset quality of the Bank, and today’s transaction is a significant step forward on our journey of de-risking the balance sheet and enhancing our capital position.” Read more. (Subscription required.)