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Banca Ifis is no longer interested in the UTP market

19 April, Milano Finanza

Banca Imi organized a roadshow with Banca Ifis. The interest of the investors was all for the non-performing loans. From the meeting, it turned out that the profitability of the NPL business is not declining despite the higher acquisition prices, thanks to the higher quality of the transferred portfolios, the more efficient collection process and the increase of collections as a consequence of the improved conditions of the economy.

In addition, it emerged that the collections are higher than the banks’ expectations and that the lack of acquisitions in the first quarter of the year in the unsecured consumer NPL sector reflects the focus of banks on the NPL transfers with Gacs, the state guarantee available till September 2018. After having completed an NPL acquisition for 4.7 billion euro in 2017, Banca Ifis is confident to be able to reach its objective of 10-15 billion euro of NPL in the 2017-2019 period.

In the first quarter of the year, Banca Ifis signed a 12-month agreement on the yearly production of the consumer unsecured credits by the first Italian consumer credit company. Moreover, the bank has subscribed a senior funding for 40 million euro for an NPL portfolio mainly secured.

Whereas the bank has no interest in unlikely to pay (UTP), namely those credits whose repayment banks deem unlikely. In fact, the management doesn’t believe in the possible creation of a UTP market since this requires an effective loan system, without considering the asymmetry between the operators on the market and who issues loans, with the possible consequence of a worsening of the bid-ask gap.

“To our opinion, Banca Ifis is not interested in entering the UTP market. We believe that the NPL business will be at the core of the group for the next years, even though we look positively at the recovery of the commercial loans as reported in the fourth quarter of 2017. We keep a rating add and a target price on the share of 39.6 euro”, concludes Banca Imi. The shares have recently fallen by 0.41% reaching 33.64 euro.

Yesterday Banca Ifis successfully concluded the allocation of the first senior unsecured preferred issuance at 5 years for an amount equal to 300 million euro. The obligation pays a 2% flat coupon. The operation has got orders for over 380 million euro for a very diversified demand coming from 70 institutional investors. The allocation reflects the following geographical distributions: Italy (60%), the UK and Ireland (28%), Germany and Austria (6%), France (3%), other (3%).

Concerning the allocation according to investor type, investment funds represent 48% of the total, banks and private banking 46%, insurance companies 4%, other 2%. The obligation is reserved to institutional investors with the exception of the United States. It was issued according to the program Emtn of Banca Ifis and it will be listed on the Irish Stock Exchange. The expected rating by Fitch is BB+ with a steady outlook. Bnp Paribas, Nomura and Unicredit acted in the role of joint bookrunner.

Source: Milano Finanza

Translator: Cristina Ambrosi