Italian NPL Update 2018-10

Hoist Finance has entered into an agreement to lease and subsequently acquire the business going concern of the Italian debt collection companies Maran S.p.A. and R&S S.rl. (“Maran Group”) in a multistep process, in the context of their composition with creditors (concordato preventivo) pursuant to Italian Insolvency Law (press release). The same investor is also acquiring a 150m NPL portfolio by Banca Patavina.

Banca Interprovinciale S.p.A., currently a subsidiary of SPAXS Spa that will become Illimity  has finalized the acquisition of

  • a portfolio of non-performing loans with a gross book value of Euro 155 million, sold by Cassa di Risparmio di Volterra and largely composed by corporate positions secured mostly by commercial and industrial assets, with an average value per position of €250,000.
  • a portfolio of non-performing loans with a gross book value of Euro 263 million acquired in an off-market transaction on the secondary market from Istituto Finanziario del Mezzogiorno S.p.A.. It is a banking portfolio and largely consists of corporate positions, of which 30% secured, with an expected return in line with the bank’s strategic plan.

Banca IFIS and SGA have signed a notification agreement aimed at facilitating SGA customer access to Banca IFIS factoring services. Above all, this initiative is intended for small and medium enterprises with exposures with SGA classified as unlikely to pay or as past due.

CARIGE is formalising the agreement with Bain Capital Credit LP for the disposal of a UTP portfolio of up to EUR 400 million in Gross Book Value, within the framework of the exclusive negotiations announced on 7 August 2018, which will allow the Bank to bring the NPE amount below the ECB’s end-2018 target of EUR 4.6 billion.

In September, IFIS NPL acquired from UniCredit, Deutsche Bank Group and one of the leading Italian consumer credit companies three portfolios of distressed loans for a total of € 1.26 billion (nominal value) corresponding to more than 70,700 positions.

MBCredit Solutions has signed an agreement to acquire four portfolios of unsecured non-performing loans with a nominal value of €665.3m, consisting of more than 40.000 positions acquired on both the primary and secondary market:

Phoenix Asset Management is going to manage a further 225m secured NPL Portfolio acquired by AnaCap and sold by Volksbank and Banca di Pisa e Fornacette.

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#Savethedate the 12th CV DAY is coming on 21st November at Crowne Plaza Milan Linate.  Click here to register.

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Will Italian politics harm NPL market?

Italian government’s plan to  run fiscal deficit of 2.4% of GDP next year is causing some worries on financial markets (with pressure on the spread between of Italian long term public bond vs German ones commonly used as benchmark) because it threatens long terms sustainability of Public Debt/ GDP ratio (currently above 130%)  and may trigger a downgrade by Rating Agencies.

May this affect Italian NPL Market?

Exported.Chart

(Spread BTP- Bund during last year)

The most immediate effect of this policies is to increase the risk premium required to invest in Italy with a consequent downward pressure on public bonds and stock prices.  Italian banks  hold large amount of public debt, 370Bn€ or 10% of their assets according the Economist, and the mark to market of these securities is going to cause large capital losses.

In near future we can expect a worsening of macroeconomic imbalances  currently affecting Italy with the increasing risk that, should the rating fall below investment grade (actual level is 2 notches above junk bonds with negative outlook), the country may find not only more expensive, but also more difficult to rise funds on capital markets.

This will probably affect Italian NPL market  only to a limited extent because:

  • in Italian market is largely prevalent the “Private Equity approach” where not only asset portfolios but also servicing platform have been acquired by foreign players – this kind of investments (doBank, Intrum-Intesa) once started would hardly be influenced by worsened macroeconomic conditions
  • risk premium increase does not matter for Italian players (IFIS, MB Credit Solutions) and has reduced impact of local subsidiary of European players (Arrow, Kruk, Hoist, Axactor) furthermore there is an increasing number of NPL buyers with a banking license (Illimity, Guber) that will raise funds to invest locally
  • since NPL are illiquid assets (like real estates) they tend to react to Macroeconomic shocks with a slower pace

A negative contribution to the volume of NPL on sale may come from the reduction of capital base that banks can use to finance increase in provisions and loss coming from NPL sales. Nevertheless GACs facility to incentive securitization recently prolonged may help to reduce this effect and there are rumors of an extension to Unlikely to Pay claims.

Finally, special and master servicing market is expected to growth due to increasing pressures of new regulation (e.g. ECB Guidelines on calendar provisioning) and Macroreconomic imbalances that currently  threaten banks’ stability may provide an interesting opportunity  for credit management firms.

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21st November 2018 – 1st CV Fintech Day

#Savethedate – 21st Novembere 2018 – Crowne PlazaMilan Linate will host the 1st CV Fintech Day. Link to the Event

Credit Village is a magazine and event management Company focused on Credit Management with 12 years experience on italian market. CV Day the autumn event of Credit Village has been able to attract some 1000 people in the last 3 editions (see pics below).

This year there will be a parallel event with a 300 delegates event focused on WeathTech and InsurTech.

This November join us to the first CV Fintech Day

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Ask here for a Free Pass  if you work in financial services, in a startup or in a tech firm

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Submit here your application as Influencer o Digital Evangelist

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Are you interested in Italian banks and NPL/UTP market? Ask for a briefing  (in person or via conference call) by sending me a private message.

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Italian NPL Update 2018-08

Italian Banks facing troubles due falling prices of Italian bonds may found some relief from the prolongation of the Italian guarantee scheme to facilitate the securitisation of non-performing loans (GACS).

MPS is about to launch project Merlino a sale of 2.5Bn of unsecured loans. PWC is said to be advisor of a competitive process that could involve as bidders Banca IFIS, Hoist, Cerberus, Mb Credit Solutions e Kruk among others.

The Business Combination between SPAXS (the initiative promoted by Corrado Passera and Andrea Clamer) and Banca Interprovinciale will give birth to Illimity Bank, a new bank specialized in the Italian SME market, featuring a highly innovative and fully-digital business model. The new bank will employ professionals with long-standing experience in both banking and specific industries who will work on the creation of a specialized bank with a clear focus on large, dynamic and underserved segments of the Italian market.

ItaCapital, a subsidiary of WSE-listed debt collector Kruk, won a tender for the purchase of a portfolio of unsecured retail receivables with a nominal value of approx. €302 million on the Italian market.

Dobank reports that it has signed an agreement with the four Greek systemic banks, Alpha Bank, National Bank of Greece, Eurobank and Piraeus Bank (“the Banks”) based
on which doBank will be assigned the exclusive management of a portfolio of non-performing exposures (“NPEs”) of approximately Euro 1.8 billion (Gross Book Value). he NPEs portfolio is composed by loans pertaining to more than 300 corporate debtors, small and medium Greek enterprises (“SMEs”) which belong to groups of companies with exposure to at least two of the Banks (“common exposures”).

Ubi Banca announced the securitisation of a portfolio of bad loans with a gross book value (gross nominal value) of €2.75 billion. The bank added that application will be made shortly for GACS on the relative senior tranche. A second portfolio of bad loans is being prepared for disposal, without recourse to securitisation.

Bain Capital Credit, LP, (“Bain Capital Credit”), announced the acquisition of a portfolio of Unlikely-to-Pay (“UTP”) corporate loans, known as UTP part of Project Valery, from the 3 Italian banks controlled by Crédit Agricole (Cariparma, Friuladria  and Carispezia).  The total book value was approximately €450 million.

Phoenix Asset Managment will mange a 700m NPL portfolio formerly originated by 3 Italian banks controlled by Crédit Agricole (Cariparma, Friuladria  and Carispezia) and now acquired by a private investor (the NPL portion of project Valery).

Banco BPM is still working at the sale of NPL portfolio that may range from 3 to 9 Bn together with the credit management platform (project ACE). Three bidders are said to have been shortlisted: DoBank running for Fortress and Illimity, , Credito Fondiario runnning for Elliott Capital Management and Prelios running for Christofferson Robb & Company  and Davidson Kempner.

Varde Partners, Barclays investment bank and Guber Banca announced the joint acquisition of a portfolio of non-performing loans originated by 53 cooperative banks, rural banks and popolari banks spread throughout Italy. The gross book value (GBV) of the portfolio is €1.397 billion. Centrale Credit & Real Estate Solutions (CCRES), part of Cassa Centrale Banca Group, acted as advisor, coordinating the sale process.

Don’t miss my panel at Berlin Distressed Investments Forum (September 13th) and workshop at Banca IFIS NPL Meeting (September 27th)

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Good News for Italian Banks

Italian Banks are facing some troubles due falling prices of Italian bonds that will likely cause substantial impairments on their balance sheets. Some relief may come from the   prolongation of the Italian guarantee scheme to facilitate the securitisation of non-performing loans (GACS).

The scheme was initially approved in February 2016 and last prolonged in September 2017. Under the scheme Italian banks meeting certain conditions will continue to be able to request a State guarantee on the lower-risk senior notes issued by private securitisation vehicles that help them to finance the sale of their non-performing loan portfolios.

The more risky funding tranches of the securitisation vehicles are to be sold to private investors and will not be guaranteed by the State. By assisting banks to securitise and move non-performing loans off their balance sheet, the scheme is an important component of Italy’s strategy to tackle banks’ asset quality problems and has already made a significant contribution. Since its entry into force until June 2018, the scheme has been accessed six times by five different banks, removing €33 billion (gross book value) of non-performing loans from the Italian banking system, which corresponds to over 60% of the total reduction of non-performing loans in Italy during that period.

The Commission’s assessment showed that, under the scheme as notified by Italy, the State guarantees on the senior notes will continue to be remunerated at market terms according to the risk taken, i.e. in a manner acceptable for a private operator under market conditions. On this basis, the Commission was able to maintain its conclusion that the measure is free of State aid within the meaning of EU State aid rules. Today’s authorization is granted until 7 March 2019.

More information will be available on the Commission’s competition  website in the public case register under the case number SA.51026 once any confidentiality issues have been resolved. (For more information: Ricardo Cardoso – Tel.: +32 229 80100)

(Link to press release)

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Are you interested in Italian banks and NPL/UTP market?

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Distressed Investment Forum – 3rd Edition

#Savethedate – The 3rd edition of the Distressed Investment Forum will take place on September 13th in Berlin.

I am going to speak in the Italian NPL Market Panel.

The event will take place at the central Titanic Gendarmenmarkt Berlin in the Ballsaal room and foyer in front of it.

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Here the link to the Event Page

Ask the Brochure to info@wjglobalgroup.com

Do you like my updates? subscribe my newsletter 

Are you interested in Italian banks and NPL/UTP market?

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GLG – Gerson Lehrman Group – Council Member

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IMN’s 3rd Annual Investors’ Conference on Italian & European NPLs

#SaveTheDate – IMN’s 3rd Annual Investors’ Conference on Italian & European NPLs will return to Milan, Italy,  at Hotel Principe Di Savoia, on 15 November 2018 ,to address the latest updates in the non-performing loan market.

The conference will bring together leading representatives from major banks, private funds, law firms, rating agencies, service providers and more to discuss the industry’s pressing topics, including:

  • Overview of Italy’s Banking Sector: Strengths, Weaknesses, Opportunities and Threats
  • Overview of Key Government Efforts to Stabilise the Italian Banking Sector (insolvency and debt recovery proceedings, bank consolidation efforts)
  • Investing in NPLs: Risk and Pricing Considerations for Investors
  • Funding the Program: The Role of Securitisation in Fueling NPL Purchasing Power
    NPL Sellers’ Roundtable: Assessing the Impact of the Government Led Initiatives to Date
  • Application to Other Mediterranean Economies: Implications for Spain, Portugal and Beyond

Link to Register

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GLG – Gerson Lehrman Group – Council Member

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