UTPs are the hotspot of Italian NPE Market


According Milano Finanza, some 18 Bn Unlikely To Pay exposures are going to be offloaded from banks’ balance sheets or assigned to outsourcers for credit management.

Monte dei Paschi di Siena, is said to be ready to sell 8Bn of UTPs to SGA, the bad bank owned by Italian Ministry of Economy and Finance. The deal is expected to be settled with a transfer price close to Net Book Value and is a relevant step in the broad restructuring process of what many say to be the World’s Oldest Bank. A successful turnaround process is essential for the sale of Italian Government share in the bank.

Source FY2018 and 4Q18 BMPS Preliminary Results

After a 2 months due diligence performed by Prelios on a 10 Bn UTP portfolio,
Intesa Sanpaolo is said to be negotiating an agreement for the sale of 4Bn pool with a transfer price of 50-55% and outsourcing assignment for the remaining 6 Bn.

I am going to talk about new model of Credit Management to deal with UTP exposures in my next seminar.

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

Link to my updated business profile

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Unsecured Debt Purchasing & Servicing – IDF, Milan 22nd May

Proud to be moderating the panel on Unsecured Debt Purchasing & Servicing at the next Italian Debt Forum NPL & Restructuring in Milan on May 22.

The event will take place at Four Points Sheraton Hotel Milano

Confirmed speakers include

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

Link to my updated business profile

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New Models of Credit Management: the UTP challenge and the broader NPE environment in Italy

Proud to announce that on the 13th of May during the 2nd annual NPL Securitisation Seminar, will be held my seminar on

Topics discussed will include:

  • Challenges for the special servicing industry raised by increasing volumes
  • Competitive landscape consolidation, specialization, M&A
  • The UTP dilemma cure vs default rate
  • New challenger disruption and old incumbent evolution
  • The broader European perspective

Speakers of  the day will include:

Find out more at the Event Website

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

Link to my updated business profile

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GACs is back (and lots of securitizations will follow)

As reported by Reuters, Italy and the European Commission have agreed on the renewal of a state guarantee scheme aimed at facilitating the sales of bad bank loans. The so-called ‘GACS’ scheme expired on March 6, but the Italian government reached an agreement with Brussels for an extension.

Italian government is expected to approve the new Gacs scheme in the same bill that will state the precautionary provisions to preserve ordinary operations of financial intermediaries and markets in case of hard brexit (here my article in Italian).

DBRS has recently published a short report on this topic highlighting how GACS has contributed substantially to boost NPL disposal volumes in the last 3 years

The new scheme is expected to be structured with a two-year term and a one-year extension option. The new scheme is also envisaged to require a higher rating level of BBB versus the prior minimum of BBB (low) on the most senior tranche.

As the first version of GACS boosted the market for securitization on NPLs, we can expect that this new version may have similar consequences. Before taking into account this update on the guarantee scheme Banca IFIS’s MARKET WATCH NPL estimated in 50bn the pipeline for 2019.

Before taking into account this update on the guarantee scheme Banca IFIS’s MARKET WATCH NPL estimated in 50bn the pipeline for 2019.

Italy’s NPL Ratio is still high compared with other EU countries, and ECB has asked Italian (as well as the other EU) Banks to make a full provision for its bad debts, not only for the new ones, as stated in March guidelines, but also for the outstanding stock.

In conclusion, most relevant drivers of NPL market in 2019 will include regulatory pressure to Non Performing Exposures as well as convenience to  use securitization schemes to benefit form the renewed guarantee scheme.

Even though current year’s volumes can hardly match 2018 extraordinary peak, we may expect a significant amount of NPL transaction also in 2019 with a large share of deal using new version of GACS. ì

#Savethedate CV Spring Date 2019 Milan Palazzo Mezzanot 5th April

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

Link to my updated business profile

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NPE R-Evolution: 2019 CV Sprig Day

Proud to be speaking at the 2019 edition of CV Spring Day that will be held at Palazzo Mezzanotte, the congress center placed in the historical building of Milan Stock Exchange on April 5.

This year programm will include 2 sessions:

  • Financial Solutions for NPL with a keynote speech by Paolo Massenza, Financial Services Leader, PwC, and a round table charied by Corrado Angelelli, Partner of Freshfields
  • Servicing models: new trends, with a keynote speech by Alessandro Biondi,co-head of NPL and distressed asset, PwC, and a round table chaired by Antonio Vanuzzo, Corporate Finance Reporter, Bloomberg

The complete program can be downloaded at this link

This year speakers include:

#Savethedate Milan 5th April Palazzo Mezzanotte

Info request can be submitted at this link

Check here if you are eligible for a Free Pass

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

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Posted in Entering Italian NPL Market, Italian Banks | Tagged , , , , , , | 2 Comments

Specialization and Concentration as main drivers of NPL market

Unipol engaged 2 transactions with BPER involving

  • Sale of the entire shareholding in Unipol Banca to BPER Banca for €220m in cash 
  • Purchase by UnipolRec of a portfolio of the BPER Banca Group non-performing loans wth a gross value of 1.3€bn for a payment of €130m

This is quite representative of the most relevant trends that are going to shape Italian banking system and NPL market in 2019, after the significant volumes exchanged in 2018, above 100Bn according the latest report of Credit Village NPL observatory. 

We see that non core operations are being disposed as well as and sometimes together with NPE Portfolios as seen in Banco BPM – Eliott deal and Intesa Sanpaolo- Intrum JV  in recent months and previously in Unicredit – Fortress deal (project FINO). 

Rumors on additional deal are quite recurring in these days and it is quite likely to see more of this kind of JV transaction later on these year.

On the other hand we also seeing larger quantities of distressed assets being transferred under management of specialized players acting on behalf of investors as well as of banks.

  • Cattura.JPG

The servicing market analyses provided by Banca Ifis in its latest market watch shows strong concentration in the management of the assets disposed between 2015-28.

Looking at servicing market including both assets sold and remained on banks’ balance sheet we see that the top 3 special servicers accounts for some 62% of total market

Sp ServicerNPE AUMMkt Share
doBank82.331%
Cerved41.316%
Tersia41.816%

Sources: dobank and Cerved AUM as of 30 June 2018 from PWC’Italian NPL Market ;Tersia AUM from press release(10.8bn sold by Intesa +30bn formerly under management by its servicing platform).

The lower burden of bad debts on Italian banks is also expected to boost M&A process.

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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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

Link to my updated business profile

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Posted in Entering Italian NPL Market, Italian Banks | Tagged , , , , | 2 Comments

Italian banks and NPL Update 2019-02

Italy’s economy tipped into recession at the end of last year, according to latest figures. In the final three months of 2018, the economy shrank by 0.2%, following a 0.1% decline in the third quarter, according to the latest update published by ISTAT.

Source: The Economist

ECB has asked Italian (as well as the other EU) Banks to  make a full provision for its bad debts, not only for the new ones, as stated in March guidelines, but also for the outstanding stock.

This may be a significant incentive to continue the large the NPL disposal process that has led to some 132-137Bn GBV transactions in 2017-18.

A substantial pipeline is also expected for 2019 where already announced deals are worth some 30Bn on primary market and 20Bn on secondary one as reported by the last Banca IFIS Market Whatch

After a 2018 mostly driven by SGA acquisition of Venete Banks legacy,
Unlikely To Pay exposures (UTP) market is also expected to be quite valuable in 2019.

GACs Scheme is due to expire in March 2019 even though an extension is deemed possible (already happened twice) and rumors of a potential amendment to include UTP are circulating since a while.

Regulatory framework has also seen quite relevant updates in the last 12 months as effectively summarized by Ernst& Young “The Italian NPEs market

The most relevant challenges will come from NPEs calendar provisioning as a result of the combined action of ECB Addendum and Trilogue Agreement.

The first one is not a set of binding rules but a s: supervisory expectations for prudential provisioning. The second is a legislative proposal, subject to endorsement by EU ambassadors and adoption by the EU Council and the EU Parliament.

Figure 2.4 provides a direct comparison between the latest minimum common coverage factors required to banks by the Trilogue (as part of the ongoing process to amend the CRR) and by the ECB.

M&A activity is also expected to increase during 2019 in order to reduce the number of players in Italian banking system to better comply with regulators’expectations and to face the emerging competition of challeger banks.

#Savethedate I will be speaking at the IMN 2nd Annual Investors’ Conference on Greek and Cypriot NPLs.

Do you like these updates? subscribe my newsletter 

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. I am also available for consulting projects on Distressed Assets pricing and Portfolio Management.

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