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Selling off NPLs: thousands of bad loans from Brescia bought by international funds
05 March, Corriere di Brescia
The artisan from Manerbio purchased that industrial shed in 2006, signing a mortgage with Bcc and putting his house as guarantee. Business didn’t go well, he didn’t pay back the loan, and the bank took the shed and the house. But even the bank isn’t doing very well, it has a pile of loans that haven’t been repaid, and it can’t manage them and had to sell that credit to a Japanese fund at 30% of its original value. The entrepreneur lost the house, the bank the 70% of its loan, the shed and the house are now property of a company in Tokyo that will appoint a local servicer (there are many of them in Italy, funds are also buying these) to find a buyer. Italy is on sale, Brescia included. Thousands of apartments, houses, and land scattered throughout the province have gone to the Japanese Bayview Asset Management Co and the American Seer Capital.
From provincial opportunists to global opportunists
Before the NPL issue had exploded, banks would have transferred credits to local companies and white knights. Now banks have the obligation to sell credit faster in order to comply with the strict parameters coming from the ECB, selling them in bulk and at discounted prices. NPL backed by mortgages are worth only 33% of their value, the unsecured ones 3%. A mixed deal is worth between 11% and 13%. It’s a rip-off, because the bank loses the difference and, considering the continuous transfers, prices are at the minimum. Ubi and Valsabbina haven’t mass sold credits yet, but the former has communicated that will sell a big NPL portfolio in the next two years (we’re talking about a value around 4 billion euro). While the latter hasn’t made any official communication so far. Cooperative credit banks are the most exposed to bad loans, and they continue selling them to comply with the parameters and the losses have greatly reduced their assets.
The most recent one has been Agrobresciano that at the end of 2017 transferred bad loans for 96 million (plus 34 million securitized) to the parent company Iccrea. The operation must have resolved the issues with bad loans of the bank (originated during the previous management), but it also meant a loss on the financial statement and a reduction of the assets. In 216 Iccrea sold 666 million collected by a group of cooperative credit banks to the Luxemburgish fund Bayview, a subsidiary of the Japanese company. The portfolio included NPL for 35.6 million originated by Bcc Garda (transferred to Iccrea for 3.9 million) and 22.3 million from Agrobresciano. All these loans were guaranteed by apartments, houses, land and much more. Btl too has sold NPL portfolios, transferring 41 million in 2014, 66 in 2015 (nearly 12 million) and 103 in 2017. The buyer was the Rome-based servicer Locam, owned by the American Seer Capital since 2013.
Funds are also buying servicers
Single credit transfer operations are countless. The protagonists of these acquisitions are the Milan-based Gma srl (300 million euro of managed credits), Eurocredit 99 of the Brescia lawyer Lino Gervasoni, Officine Cst from Rome, and many more. Servicers often connect the international funds with the local market: the funds buy the NPL portfolios and they appoint the local companies for their management. Besides Locam, there is also the Rome-based company Sistemia, acquired by Kkr, Credit Base International from La Spezia owned by the Polish Kruk, while 33% of the Brescia-based Guber has been acquired by the American Varde. Independent servicers still survive but they attract big funds as they try to take over servicers. Hence, very little is still Italian.
Source: Corriere di Brescia
Translator: Cristina Ambrosi