Bank of Valletta is engaged in advanced negotiations to sell part of its portfolio of long-standing non-performing loans with a view to strengthening its capital and liquidity buffers. It said in a statement that in selecting the portfolio of non-performing loans, it has followed a rigorous process using predefined criteria.
"Whenever the bank’s customers experience credit financing issues, the bank always aims to identify workable solutions to reinstate the quality of the borrowings. However, in the case of the loan positions carried in this portfolio, whilst the bank has over several years taken several steps to recover the outstanding amounts owed by the underlying borrowers, the clients defaulted on their obligations and agreed terms on multiple occasions," the bank said.
The portfolio does not include any loans where the underlying borrowers defaulted on their obligations for health-related reasons.
BOV did not explain what impact the sale would have on clients, or the size of the portfolio that will be sold. It said, however, that it will keep the market informed of any developments as they arise and will consequently publish further details in due course.
Earlier this year the bank said net Expected Credit Losses (ECL) for the period to June 2023 amounted to €4.6 million net charge. As at June 2023, the ECL coverage for credit impaired assets stood at 48.3% (Dec 2022: 53.8%) while the ratio of non-performing to the total portfolio stood at 3.96%.