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First bad loan sale with Italian state guarantee ready for launch

Published 2016-07-11, 11:46 a/m
© Reuters. First bad loan sale with Italian state guarantee ready for launch
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MILAN, July 11 (Reuters) - The first sale of a bad loan
portfolio backed by an Italian state guarantee scheme is ready
and could be launched in the next few weeks, one of the sale
advisors said on Monday.
Italian banks have piled up around 200 billion euros ($220
billion) in non-performing loans and have so far resisted
pressure to shed them because the price at which specialist
investors would buy them is, in many cases, lower than their
book value.
The government has set up a guarantee scheme banks to bridge
part of the price gap and spur bad loan sales.
Real estate group Prelios PCRE.MI , consultant
PriceWaterhouseCoopers and JP Morgan are advising small unlisted
lender Banca Popolare di Bari in selling a 500 million euro bad
loan portfolio backed with state guarantees.
Banca Popolare di Bari's transaction could open the way to
other similar deals in coming months.
"We are ready to launch the transaction for Popolare di Bari
as soon as the government rubber stamps the decree on the
guarantee scheme," Riccardo Serrini, head of Prelios' unit
specialising in debt collection and real estate management, told
Reuters, adding the decree could be approved in weeks.
Under the scheme, Banca Popolare di Bari will put its bad
loans into a special purpose vehicle that will wrap them into
securitised bonds and attach a state guarantee to the less risky
ones, the senior tranche. This will make the senior tranche more
appealing for investors, according to Serrini.
"The state guarantee widens the group of potential buyers
and reduces the yield wanted by investors," Serrini said.
He added that institutional investors such as banks,
insurance groups and pension funds would be among potential
buyers of the senior tranche.
($1 = 0.9053 euros)

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