UniCredit SpA is close to selling bad loans with a face value of more than €1.5bn ($1.7bn), signaling that the pandemic hasn’t undermined a thriving market for Italian credit.
UniCredit is in advanced talks with Illimity Bank SpA and Guber Banca SpA to offload about €700mn of mostly unsecured non-performing corporate loans, according to people with knowledge of the matter.
Separately, the lender is close to finalising the sale of an €800mn package of soured debt to Guber and Banca Ifis SpA, the people said, asking to not be named because the discussions are private.
Representatives for UniCredit, Illimity, Ifis, Guber declined to comment.
The transactions, respectively dubbed Lisbona project and Tokyo project, may be finalised by the end of the month, and are part of Milan-based UniCredit’s ongoing effort to clean up its balance sheet and reduce risk.
Despite the affects of the pandemic on borrowers, the bank reduced its non-performing loan ratio to 4.9% as of March 31 from 5% at the end of December.
The deals will be closely watched by peers seeking signs that the NPL market is still alive as they brace for a new wave of customers defaulting on mortgages, business loans and other debt because of the coronavirus.
Earlier yesterday, UniCredit said it reached an agreement to sell €335mn of bad loans to Banca Ifis in a separate deal.
“These transactions highlight that the market hasn’t been killed off and that the biggest banks like UniCredit are ready to face the new situation post-lockdown,” said Massimo Famularo, head of Italian non-performing loans at advisory firm Distressed Technologies.
The deals would be the first sales out of about €8bn of NPLs that UniCredit is offering in several bundles, according to one of the people.
They include about €2.5bn of bad loans split between packages Lisbona, Tokyo and New York; €3bn of so-called unlikely-to-pay loans through the Dawn and Sandokan 2 initiatives and about €2.5bn of leasing loans.
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