Development of operating model improvements of the Real Estate subsidiary of a major Greek Bank

Background

In the aftermath of Greece's financial crisis, a significant challenge emerged with the restructuring of Greek banks: a substantial number of non-performing loans (NPLs), or "red loans," were secured by real estate assets. These included both residential and commercial properties used as collateral by borrowers. When banks began restructuring, they were required to clean up their balance sheets. This effort involved measures to recover funds from these red loans, often through collaborations with servicers and loan recovery entities, resulting in an extensive portfolio of real estate in the banks' possession.

The necessity of efficient real estate management escalated as banks now needed to oversee an unprecedented volume of properties acquired from these NPLs. Historically, banks had only managed their own operational properties, such as headquarters and branches, but the mid-2010s brought a wave of additional assets requiring active economic development for debt recovery purposes.

The Challenge

One of the systemic banks faced an urgent need to manage and monetize the vast stock of real estate assets tied to red loans. Recognizing that these properties needed to be systematically acquired, managed, and monetized, the bank decided to establish a new General Real Estate Management Division. This division's primary objectives were:

1. Efficient acquisition of real estate assets linked to NPLs.
2. Structured management and economic development of these assets.
3. Recovery of debt through the monetization of these properties to address the NPL burden.

By designing a robust business plan, a tailored organizational structure, and integrated supporting systems, we transformed the bank’s approach to managing its extensive NPL-backed real estate portfolio—turning a challenging asset burden into a sustainable, revenue-generating operation.

Our Approach

Our firm, leveraging extensive experience in real estate management, public property development, and banking operations, was engaged to create a comprehensive business model for this new division. The project included designing processes, functions, and an organizational structure tailored to meet the bank’s needs. Key steps were as follows:

1. Development of a Business Plan: We created a five-year business plan forecasting the potential divestment of properties. This plan outlined expected property values and projected recovery amounts, giving the bank a roadmap for managing and monetizing its real estate portfolio.
2. Design of Organizational Structure: Based on the business plan, we crafted a tailored organizational structure to support the division. This structure included defined procedures and job descriptions for critical roles, ensuring the bank had a framework to operate efficiently.
3. Implementation of Supporting Systems: We integrated necessary information systems to aid property acquisition, valuation, and management functions within the new division.

Outcome

The General Real Estate Development Division was established successfully, taking ownership of the real estate portfolio tied to NPLs. Over time, as auctions and other acquisition mechanisms concluded, the focus of the division shifted from property acquisition to capital recovery and monetization. With the robust structure and processes in place, the bank is now able to streamline its debt recovery efforts effectively and minimize losses associated with non-performing loans.

Impact

This new division remains a critical component in the bank's ongoing strategy to handle its NPL portfolio, and the framework we provided continues to support efficient real estate management and monetization processes. By combining our expertise in real estate and banking, we helped the bank transform a challenge into a sustainable operational function that now plays a key role in its financial recovery and long-term strategy.