For a Peek Into Greek Banking Mess Look at Eurobank-Nikas Ties
The retail bank is a shareholder and biggest lender to Nikas
Nikas hasn’t serviced its loans from banks on time since 2012
As Greek banks struggle with more than 100 billion euros ($111 billion) in soured loans, the case of meat seller P.G. Nikas S.A. provides an example of how things went so wrong.
The seller of Fuego brand of sausages and hams was a profitable company in 2004, when an offshore fund created by an investment firm partly owned by Eurobank Ergasias SA took control of it in a leveraged buyout. Greece’s third-biggest bank backed the purchase with a loan it arranged.
By 2006, after boosting dividends and returning cash to shareholders partly using Eurobank-arranged loans, Nikas began posting losses. It now has negative equity, hasn’t serviced loans on time since 2012 and is kept afloat by lenders including Eurobank, which became a direct shareholder in 2010.
On Feb. 19, Nikas, with total debt of 77 million euros, said it signed an accord with some of its creditors involving loan writeoffs in a deal that will leave taxpayer-aided Eurobank taking the biggest hit. Although a minuscule piece of the country’s bad loans problem, the Nikas example, with its tangled web of ties to Eurobank, provides a glimpse into the challenges faced by Greece and its banks as they struggle to extricate themselves from a deepening private debt crisis.