BOV sells chunk of non-performing loans for €26 million

Bank of Valletta has entered into an assignment agreement to sell a portfolio of non-performing loans for a consideration of €26 million.

The bank announced the agreement in a press release on Tuesday.

Without giving a name, the bank said the acquirer of the loans is a Maltese public limited liability company established as a securitisation cell company. The company was selected after a formal offer was received as part of a bidding process conducted by the bank.

The portfolio consists of 707 non-performing loans across 245 borrowers. The majority of these were granted commercial loans to finance business activities across a number of different industries.

There are also personal loans, credit card loans, home loans, encroached savings and current accounts in the portfolio.

“The portfolio is significantly biased towards loans and facilities that have been in default for a long period of time, with 90% of the portfolio comprised of loans and facilities that have been in default for five years or longer, with 90% of the portfolio comprised of loans and facilities that have been in default for five years or longer” the bank said.

The bank said it is selling this portfolio to generate income from non-performing loans that may have been written off completely or been provided for, in large part, in previous years.

“The current net book value of the Portfolio reported in the Bank’s balance sheet is in the region of €5 million. In this regard, the Transaction is expected to have a positive impact of approximately €18 million on the Bank’s profitability for financial year 2023, representing the difference between the accumulated expected credit loss (provisions) and the actual realised loss following the Transaction.”

Last October, the bank said it was in advanced talks to sell part of its portfolio of long-standing non-performing loans, but had not quantified the portion it was selling.