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PCP Capital Partners LLP is looking to spend around $2 billion snapping up nonperforming loans from Greek banks, according to a person familiar with the matter.

PCP, run by Amanda Staveley, a financier known for her close ties to Gulf investors, is aiming to lead a recapitalization of Pancretan Cooperative Bank, this person said. The small Greek lender could then be used as a vehicle to buy assets that other local banks want to shed over the next 12 months or so. PCP's push into Greece is being backed by sovereign investors, this person added. Pancreten couldn't be reached for comment.

Cleaning up the roughly €110 billion ($122 billion) of soured loans festering on Greek bank balance sheets is becoming a priority for the government as it tries to get credit flowing through the economy again. As part of its latest bailout package the Greek parliament had to vote through laws making it easier to restructure loans or reclaim assets.

Foreign investors are being encouraged to help out. Earlier this year U.S. private equity group KKR & Co. signed an agreement with Greece's Alpha Bank and Eurobank to manage up to €1.2 billion of their problem loans. The country's largest lender, Piraeus, is planning to strike a similar deal with KKR. National Bank of Greece SA, is expected to follow suit, according to analysts.

Ms. Staveley, who is best known for orchestrating a £ 3.5 billion ($4.57 billion) investment from Abu Dhabi to prop-up Barclays PLC at the height of the financial crisis, has already put in place a management team in Greece, according to a person familiar with the matter. PCP is will work with a local group to collect or restructure debts. The fund will also look at acquiring Greek businesses.

How private equity groups fare will be a key test of the structural reforms the Greek government has put in place. Greek banks have dragged their feet selling loans to private equity groups at steep discounts, arguing they just need time to restructure them. The European Central Bank is now turning the screws, keeping detailed data on how much progress each bank makes in getting rid of bad loans and setting explicit targets, executives at several banks say.

In July the top management of Greece's bank rescue fund—the Hellenic Financial Stability Fund—was forced out for not pressuring banks to get rid of bad loans fast enough.

Still some complain the legal system in Greece is too sclerotic. Pushing through bankruptcies remains slow, hampering the cleanup of bank balance sheets. If even the private-equity firms fail to grind out returns this could buy the banks some respite from regulators, one senior executive at a major bank says.

Stelios Bouras contributed to this article.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

August 08, 2016 04:55 ET (08:55 GMT)

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