Erste Group Said to Cancel Sale of Romanian Loans

Erste Group Bank AG’s Romanian unit has canceled a sale of bad loans with a face value of about 2.7 billion euros ($3 billion), according to two people with knowledge of the matter.

Blackstone Group LP and Lone Star Funds were the only remaining bidders for the Banca Comerciala Romana portfolio, codenamed Project Neptune, which includes corporate loans and real estate debt, according to the people, who asked not to be identified because the matter is private. The bids came in too low, one of the people said.

Banca Comerciala Romana spokesman Ionut Stanimir declined to comment on the the debt sale. A spokesman for a media-relations company that represents Lone Star and Christine Anderson, a New York-based spokeswoman for Blackstone, declined to comment.

Michael Mauritz, a spokesman for Erste, said the bank doesn’t comment on “market rumors” regarding Neptune. The bank is continuing to work on “an accelerated resolution of the non-performing loan legacy,” he said.

Erste had provisioned for 84 percent of the face value of its Romanian non-performing loans at the end of June, according to the group’s half-year results. The lender’s chief risk officer, Andreas Gottschling, said in August that he would only consider “very modest” markdowns to that reduced book value when selling them.

(Corrects provisions on loans in fifth paragraph.)
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