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The UTP challenge

06 February, Milano Finanza

2017 was the year of NPLs: the effort of the Italian banks to reduce bad debts was great, bringing to a reduction of the volumes from 324 at the end of 2016 to 300 in June 2017, and finally to 250 last December, according to the survey by PwC “The Italian NPL Market”. It’s still a big amount of debts, but they might be solved for good in 2018, thanks to the acquired experience in managing them. In fact, the gross bad loans have reduced from 200 billion at the end of 2016 to 190 six months later, while the net value has gone from 87 to 71 billion. The unlikely to pay are also decreasing, going from 117 to 104 billion, while the past due have reduced from 7 to 6 billion. These results are due also to the bailout plans that have pushed transfers of NPL portfolios for a value of 60 billion, bringing the NPL stock to 72 billion according to the Market Watch of Banca Ifis. Furthermore, the real problem that needs to be managed now is represented by the unlikely to pay. “Many are speculating a new wave of the market, the UTP transfers”, explains Giovanni Bossi, Banca Ifis Ceo. “According to us, it’s rather unrealistic, as that would require a credit system with people capable of issuing credit, not collecting credit”. “Starting from this year, banks must keep provisions also for the performing positions of companies at the first difficulties”, adds Alfredo Goldaniga, Ceo for Pepper Credit Management Italy. “In this way, it will be possible for banks to plan portfolio disposals, amortising the loss in the span of five years. These changes will force banks to introduce new management systems that include also appointing a specialised servicer able to monitor the credits, which will be not only collected but also managed in order to limit the risk”.

Source: Milano Finanza

Translator: Cristina Ambrosi

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