UPDATE 1-Bank of Piraeus Takes Loss as Loan Loss Provisions Rise

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ATHENS, June 1 (Reuters) – Bank of Piraeus, Greece’s largest lender by assets, reported a first-quarter loss on Monday after “front-funding” loan impairment provisions to account for the impact of the coronavirus crisis.

Piraeus Bank, 26.2% owned by the country’s HFSF bank bailout fund, reported a net loss of 232 million euros ($ 258.08 million) against a net profit of 14 million euros at the same period a year earlier.

The coronavirus pandemic has struck just as Greek banks progressed in their attempt to sell, write off or restructure billions of euros of bad debt accumulated during the latest financial crisis.

Piraeus said the worse-than-expected macroeconomic outlook resulted in further write-downs of € 324 million, reflecting the impact of the COVID-19 pandemic.

Taking into account its effect on trading, the total impact amounts to 370 million euros, including an impact of 46 million on the bank’s trading results.

Piraeus Bank said frontloading bad debt provisions for subsequent quarters would allow the bank to execute on its 2020 budget.

Greek banks have offered businesses hit by the coronavirus crisis a six-month freeze on loan repayments as part of relief efforts to help borrowers cope with the economic crisis.

Piraeus said loans under payment moratorium, granted to eligible customers without nonperforming loans, amounted to € 4.0 billion.

“Asset quality trends were favorable in the first quarter despite the headwinds in the market. It is still too early to see if the flows will deteriorate after the lifting of the debt moratoria, ”said CEO Christos Megalou.

He said the bank was working in a preparatory phase to securitize € 7.0 billion in bad loans, transactions which its baseline scenario is expected to take place in the fourth quarter of this year. (Reporting by George Georgiopoulos. Editing by Jane Merriman)

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