Italian government studying new rules to help banks reduce NPLs

Italian government (as reported by Sole24Ore)  is considering including in the next budget law measures

  1. to widen the scope of bad loan securitisations allowing the possibility of “mixed structured” including both impaired and performing loans and  including tax concessions for special purpose vehicles as well as to
  2. allow banks to issue bonds that would rank between highly protected senior and junior debt in the event of a default.

The technicians, in short, work on a series of instruments to accompany the “long road ahead” that must be covered by a financial system  according to the words of the Minister of Economy Pier Carlo Padoan (as reported by LaRepubblica) during a recent Luiss conference on the revitalization of the banking system:

«a un punto di svolta, ma bisogna continuare su questa strada. Il cammino resta lungo».

“at a turning point, but we must continue along this path. The road remains long “.

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Ignazio Angeloni, a member of the Supervisory Board of the European Central Bank has a similar opinion:

«La strada che le banche europee e italiane in particolare stanno percorrendo è quella giusta. Le banche italiane  hanno fatto un percorso notevole, c’è stato un miglioramento netto, ma non bisogna sedersi sugli allori».

“The path that European and Italian banks in particular are taking is the right one. The Italian banks -have made a remarkable path, there has been a net improvement, but you don’t have to reduce the pace. “

In addition, Mr Angeloni has pointed out that small and medium banks will be the next focus especially in countries like Italy, Germany and Austria.

These entities are not directly monitored by ECB ( actually national Central Banks act on behalf of ECB) and may face relevant conflicts of interest and irregularities, since depositors, creditors and investors can be the same people.

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Global Distressed Investments Forum

#Savethedate September 26th, 2017   – London, Marriott Grosvenor Square –

Global Distressed Investments Forum

Topics covered:

  • NPL Transactions – developments, players and deals
  • Private Equity, Special situations, distressed M&A
  • Effective debt purchasing strategies & collections models
  • Pan-European Special Opportunities
  • CRE & secured portfolios
  • Upcoming opportunities in emerging markets; Asia-Pacific & LATAM
  • Corporate/SME NPLs
  • Institutional fixes at an EU Level and ECB guidance for NPLs
  • Market Focuses on Italy, Romania, Greece, Spain and many more..

 

Cattura

GDI 2017 takes place in the newly reconstructed London Marriott Grosvenor Sq. in the Mayfair area, with up 800m2 dedicated to the event.

Preferential accommodation rates available for participants of the GDI 2017 Forum.

Event Website 

Register to the Event

Sponsorhip

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#savethedate NPLmeeting 2017

NPLMETING, one of the most relevant event in Italy on Non Performing Loans organized by Banca IFis, this year will take place on  September 15, Port of Venice.

The claim of this edition is

THE MARKET PLACE – A TOOLKIT FOR THE NPL MARKET

and after a short speech held by Mr Giovanni Bossi, CEO of Banca Ifis,  a quick outlook on Macroeconomic Scenario will be presented by Andrea Presbitero, IMF

Two panels will follow covering:

  • the different perspectives of Regulators vs Market Players
  • a focus on Execution of acquired portfolios

The morning will be closed by a motivational speech held by a special guest.

In the afternoo 2 panle will cover

  • an HR perspective on skills required for Banks and NPL
  • some insights from market protagonists  (Giuseppe Castagna, Banco BPM; Alessandro Vandelli, BPER; Paolo Petrignani, Quaestio; Giovanni Bossi, Banca IFIS).

Event website link

Cattura

Materials available for the download

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Italian NPL Market Update 2017-09

REV the “Bad Bank” that inherited the NPLs of the 4 banks resolved by Italian government in Dec 2015

  • has closed the “Projectg Vasari” selling 300m GBV to US fund Seer Capital that will use Locam as special servicer
  • has shortlisted Bain Capital, Fortress and Cerberus for the final stage of Project Rossini a mostly secured NPL potfolio worth some 1 Bn GBV

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Unicredit is launching “Project Firenze” a mixed (mostly unsecured) NPL portfolio worth some 1-1,5Bn GBV. The sale is expected to be closed by 2017 year end. All the most relevant investors are said to be interested to the project including Fortress and Pimco that won the precedent Project Fino (17,7Bn with sale agreement last year and closing this year).

As reported by Bebeez and Milanofinanza 3 investor syndicates have been shortlisted for the final round of Intesa Sanpaolo’s Project Rep 

  • Gwm in Jv with Pimco
  • Pillarstone with KKR and Coima
  • TPG with Starwood and Prelios

The portfolio is worth some  1.35Bn GBV and will be disposed using a securitization structure in which the bank will retain some part of the senior notes. Some 58% of collaterals are residential real estate assets.

Carige is said to have received more than 30 LOIs for its 1,2 Bn NPL portfolio that is going to be sold jointly with the credit management operations. Following the Brisca Securitization of last June, the bank is trying to carry on a proactive strategy to reduce NPL stock and improve credit management strategy.  The strategy include the creation of a new NPE Unit lead by Marco Cavazzutti formerly head of litigation for Banca Popolare di Bari and previously head of restructuring for Unicredit.

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When they say Italy is addressing its NPL problem…

Sometimes one single graph explains more than thousands of words.

NPLS Italy

Source: World Bank Open Data

Below the data points at beginning and end of the period

Dati

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Creval “Elrond” project proves Public AMCs are Useless

Creval completed a securitization deal that will allow the deconsolidation of 1.4Bn NPL. As stated in this previous post  this deal is a further evidence that there is actually no need of Public Asset Management Companies in order to facilitate NPL portfolio disposal.

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The Creval deal (here the press release for further details) will produce  an improvement of the gross NPL ratio from 27.2% as at 31 March 2017 to an estimated 21.2% as at 30 June 2017 and will be structured with

  • a global trasfer price of 34.7% of GBV
  • a EUR 464 million senior tranche, with expected rating consistent with the requirements of the legislation on the state guarantee (“GACS”);
  • a rated EUR 42.5 million mezzanine tranche, sold at €21.25mn to an investor at a capital loss
  • a EUR 20 million junior tranche, sold at zero at an investor.

The senior tranche notes, having a Eu6m + 50bps return, are expected to be covered by the GACS – to be formalised by the MEF in the next few days -, and entirely retained by the Originators, whereas the mezzanine and junior tranches were placed with an institutional investor at the outcome of a competitive bid.

Even though the mechanics of the sale may somehow be questioned (1.4bn are being  offloaded from balance sheet with only 21.25m capital injection form a third party) the bottom line is that the state guarantee is enough to make sustainable deconsolidation possible and there is actually no need of public sponsored Asset Management Company that acquire NPL at higher than market average prices.

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Banca Ifis Market Watch on Italian NPLs

Banca Ifis published on 17th July its quarterly update (here the full report) on Italian NPL Market. From the press release:

With over 33 billion euro of non-performing loans sold in the first five and a half months of 2017 – and with the closure of the FINO project, which saw the sale of € 17.7 billion euros of mixed non-perfroming loans from Unicredit to PIMCO and Fortress – 2017 will go on to record as the year of the “explosion of NPL transactions”. According to Banca IFIS estimates, contained in the exclusive report “Market Watch NPL – The Italian Scenario”, around 71 billion euro of additional non-performing loans will be sold by 2017, reaching 104 billion worth of distressed assets exchanged in the Italian market. An amount that makes 2015 and 2016 NPLs volumes seem reductive (respectively 19.1 billion euro in 2015 and 17.3 billion euro in 2016). (…)

The average prices of secured portfolios (guaranteed by other assets or real estate) show a drastic fall after the surge in the end of 2016. In the second quarter of 2017, the price level for these assets fell to 33%, as a result of an increase of the offer in this market. If the prices of secured assets fall, then those of consumer portfolios go up. The average price is around 11% due to an increase in demand and higher quality of credit (and their heritage of information)

Read the full report

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