EXCLUSIVE-Intesa tests the market with sales of bad debts of up to 5 to 6 billion euros-sources

MILAN, Feb.1 (Reuters) – Intesa Sanpaolo markets a portfolio of bad debts worth up to € 5-6 billion ($ 6 billion to $ 7 billion), two people familiar with the matter said, as Italy’s biggest bank steps up efforts to reduce bad debts after buying small rival UBI.

Intesa Sanpaolo, who releases annual results on Friday, is expected to brief investors on her clean-up plans, as Italian banks brace for another wave of problematic debt due to the pandemic once government support measures are lifted .

Last year, Intesa turned the Italian banking landscape upside down by launching an unsolicited takeover bid on UBI to consolidate its national leadership.

The discounted valuations of Italian banks enabled Intesa to achieve a paper profit of 3.3 billion euros on the UBI transaction at the end of September.

Intesa said it would use the funds to cover integration costs and expedite transfers of non-performing loans (NPLs), in accordance with guidelines from supervisory authorities.

When presenting the nine-month results, CEO Carlo Messina told analysts that the bank “will achieve impressive new deleveraging (NPL) in the coming quarters.”

The portfolio of marketed loans includes loans issued by Intesa and UBI, the two said. One said the portfolio, which also included leasing contracts, was split into many sub-portfolios. A third source confirmed that various loan pools were marketed.

Intesa finalized in December a securitization of bad debts of 4.3 billion euros, reducing its bad debt expense to 24.6 billion euros gross of impairments, or 5.9% of total loans. This is just ahead of the 6% target that the bank had set for the end of 2021 as part of its current business plan.

Taking into account the acquisition of UBI Banca, Intesa’s impaired loans amounted to around € 31 billion at the end of last year.

$ 1 = 0.8267 euros Report by Valentina Za. Editing by Jane Merriman

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