Eurobank Ergasias SA completed the first electronic auction of a foreclosed property today. Next up – Piraeus Bank.
Eurobank was the sole bidder for the first property in Greece to be sold by e-auction. The owner stopped paying the 1.2 million-euro ($1.42 million) mortgage for the residence in 2013. The bank bought the property at its starting price, which was set at 720,000 euros.
The notaries’ initial abstention from foreclosure proceedings may have scared off bidders.
The use of an electronic platform for auctions is central to negotiations between Greece and its creditors for the disbursement of the next tranche of emergency loans. The procedure will enable lenders to better manage the bulk of non-performing loans, according to the Bank of Greece.
Mario Draghi raised the matter at a meeting of euro area finance ministers earlier this month. Greece’s government has recently dropped its resistance to foreclosures, a politically toxic issue in the country.
At end June, Greek lenders had 72.8 billion euros of non-performing loans while the non-performing exposure ratio was more than 50 percent. By the end of the third quarter, National Bank of Greece SA managed to meet its annual NPE reduction target, while Eurobank’s NPE ratio fell to 44.7 percent at the end of Sept. from 45.1 percent at end June, and Piraeus Bank SA met its NPE target for the fifth quarter in a row.
According to the targets that they have agreed with authorities in September 2016, lenders have to reduce NPEs by 15 billion euros in 2018 and a further 16.6 billion euros in 2019. In addition, Greek banks agreed in October to sell 5 billion euros more bad loans to address concerns that they will not meet the targets.