Tag: NPL

SGA focusing on UTPs in the new business plan up to 2023 and searching for new management mandates

19 October, Bebeez

SGA (Società Gestione Attività), a company owned by the Ministry of Economy and Finance, manages bad loans amounting to approximately 20 billion originated from the former Banca Popolare di Vicenza and Veneto Banca, along with 7 billion euro of unlikely-to-pay and past due credits. The company approved yesterday the guidelines for the new five-year business plan 2019-2023 which is based on three pillars:

diversified management between bad loans, unlikely to pay and past due credits: namely the so-called “gone concern” credits (to be collected) and the “going concern” credits (requiring a proactive management as they can return being regular credits), involving internal and external specialised professionals in order to optimise the collected amounts;

a proactive approach on the going concern holdings with the possibility to issue new funding to recover or preserve the company’s operations. It’s not by chance that SGA has launched the issuance of bonds for one billion euro in the past few months to obtain new capitals;

specialised professionals and innovative technologies for a business modal based on organisation, efficiency, flexibility and scalability.

Concerning the going concern credits, currently amounting to 7 billion, SGA stressed how these holdings require a proactive management focusing on the debtor, in order to recover and preserve the continuity of business and to normalise the financial position of the client, company or private. The objective is to maximise the value of the collection activities. For this purpose, SGA may issue new funding to favour the operational continuity of companies and the relaunch starting already from the reorganisation phase.

For what concerns the gone concern holdings, amounting to 12 billion, the approach must follow a strict procedure to maximise the value of the underlying guarantees, whenever present, and to optimise the judicial and extra-judicial collections. To achieve that, SGA is collaborating with the main players of the sector to use the economies of scale to achieve a standardised management of small NPE portfolios, maximising the collection performance, depending on the credit type, and optimising costs.

SGA, whose president and Ceo are respectively Alessandro Rivera, Treasury General Director, and Marina Natale, won’t just limit to manage its portfolio. As the memo disclosed yesterday reads, “SGA is intending to seek new opportunities on the market to achieve an adequate critical mass, leveraging the scalability of its business model. The objective is to maximise the economies of scale and to manage the collections efficiently and sustainably, obtaining new management mandates, especially in the going concern segment”.

Concerning the future SGA operations, the memo continues: “The plan for the next five years is based on a business model aimed at limiting costs and achieving an Ebitda margin equal to 35%, as well as a capitalisation with a Cet1 equal to 15%, which is an essential element to pursue new strategies and the expand our supporting activity to SMEs”.

Source: Bebeez

Translator: Cristina Ambrosi

Banca Patavina selling an NPL portfolio for 150 million to Hoist Finance

12 October, Reuters

Bcc Banca Patavina presented its plan concerning the transfer of an NPL portfolio for 150 million euro to the Swedish company specialised in non-performing loan management Hoist Finance.

The operation was presented during a press conference.

By the end of the year, the Veneto bank from will have loans for 20 million on its accounts which will be managed in-house.

The operation will allow Banca Patavina to bring the Cet1 from 14% to 13%.

Moreover, the bank confirmed the acquisition of other six branches from Banca Sviluppo, and the former Bcc Euganea and CrediVeneto.

Banca Patavina closed the first semester with net profits equal to 2.5 million euro. The management is optimistic regarding the second part of the year.

Source: Reuters

Translator: Cristina Ambrosi

Carige: obligations by the end of the year, NPL sale now

12 October, Il Sole 24 Ore

The agreement with Bain Capital Credit concerning the transfer of UTPs for 400 million has been formalised. Meanwhile, the procedures for the securitisation with Gacs (the state guarantee) concerning NPL for approximately 900 million have started. This operation too is scheduled for the end of the year. That’s what the Carige members meeting decided, the first after the nomination of Fabio Innocenzi as Ceo and Pietro Modiano as president. The Board gathered yesterday just after the downgrade of the bank by Fitch from B- to CCC+, based on the “real possibility” of a default of the bank from Genoa. As a result, the shares lost up to 10% on the Stock Exchange and closed with -6.12%, setting at 0.0046 euro.

Concerning Fitch, the Board stressed how the rating is based on the figures dated before the commitment taken by the majority shareholder Malacalza to support the bank after the last meeting. Moreover, the Board explains that the resolutions risk can be determined only in the case the capital strength requirements are not accomplished. The indicator of such requirements is the phased-in Cet1 ratio, which was 11.9% on 30th June: above the level required by the ECB (9.625%) and the threshold recommended by the Surveillance Authority to Carige (11.175%).

Concerning the Npe strategy, the Board gave the green light to the Ceo to proceed with the formalisation of the agreement with Bain to sell the UTP for a gross book value of 400 million. The operation will bring the Npe stock below the target of 4.6 billion agreed with the ECB. As already mentioned, the preliminary activities for the securitisation with Gacs will start by the end of the year.

Moreover, the bank might evaluate the various modalities of operational turnaround, and it will assess and identify a potential investment bank for possible mergers in the next meeting.

Concerning obligations, the deadline for the Capital conservation plan has been confirmed for 30th November 2018, as no postponement was requested to the ECB. The Board of Directors assigned the Ceo for the development of an operational plan by the end of the year to grant compliance with the Overall capita requirements, regardless of the current market conditions. For this purpose, the ideal conditions to fill the gap detected by the ECB are currently under study, along with the guarantees needed for the execution of the plan. The Board will decide in this regard by the end of the month.

The transfer of 80.1% of Creditis to Chenavari has also been discussed, and the negotiations are going on.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Creval sold NPLs for 220 million

08 October, Monitor Immobiliare

Creval disclosed to have met the goals set in the 2018 de-risking plan, as the bank “completed the transfer to Credito Fondiario of an NPL portfolio of the secured type for gross book value equal to 220 million”.

The operation will positively impact on the fully loaded Cet1 ratio by approximately seven basis points on the figures as of 30th June 2018, according to what was already communicated to the market.

The economic and financial effects of the transfer were already booked in the first semester of 2018. With the completion of the operation concerning the Gimli portfolio, the 2018 de-risking plan has been accomplished, and the result is aligned with the schedule set in the 2018-2020 business plan. According to the de-risking plan, the bank has carried out NPL operations for over 2 billion euro this year.

Source: Monitor Immobiliare

Translator: Cristina Ambrosi

Mps is selling its assets. Divestitures for over 5 billion

06 October, Il Sole 24 Ore

Monte dei Paschi is currently carrying out some significant operations to complete all the planned transfers within the year according to the de-risking process the state-owned bank is undergoing.

In the next weeks, the bank will put for sale its real estate portfolio. Its value is assessed around 500 million. The advisor Duff & Phelps Reas will launch the procedure soon by sending the documents to the potential investors (for large part international investment funds). The portfolio includes the historical buildings in Via del Corso in Rome, Via Santa Margherita in Milan, as well as properties in Siena and Padua, formerly owned by Antonveneta. A small portion of the portfolio is represented by closed down bank branches.

The focus is, however, on the NPL and UTP portfolio. The advisor Pwc is expecting the non-binding offers by 12th October concerning the 2.4 billion NPL portfolio, also called project Merlino. The portfolio is divided into four parts, including also the consumer credit division Consum.it. Banca Ifis, Hoist, Cerberus, Mb Credit Solutions and Kruk are among the candidates.

Mps has also launched the Morgana project (with Kpmg as the advisor) concerning UTPs for 1.1 billion. The non-binding offers came last week. The portfolio includes several leasing holdings backed by real estate for about 700 million euro. Among the competitors, there are Bain Capital Credit and Cerberus.

Moreover, Mps is also finalising the Alpha operation concerning UTP for approximately 420 million. The project regards about 30 holdings, for the large part related to real estate, including those of the Rome developers Pulcini and the Una Hotels owned by Fusi. The operation is at the final stage. The offers came from Bain Capital Credit, Cerberus, Fortress and the team composed of Aurora Recovery Capital and the American investor Farallon. In addition to these operations, the bank guided by Morelli is also selling several single name impaired loans, namely holdings towards a single debtor.

The returns from the auction that will be launched on the IT platform are assessed around hundreds of millions. The advisor Pwc is awaiting the offer from Cedacri and of some other strategic groups.

Finally, Mps entered the agreement with the company owned by the funds managed by Wargus Pincus concerning the sale of Banca Monte Paschi Belgium. The bank’s subsidiary, assisted by Rothschild, has total assets for 1.5 billion, loans for 0.8 billion, a direct collection for one billion and equity for 110 million as per last December. The transfer is compliant with the commitments agreed with the European Commission regarding the 2017/2021 reorganisation plan. The impact on the Cet1 is not significant, and it has already been included in the reorganisation plan’s forecast. The next step will be selling the French assets.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Mps is ready to complete the Alpha2 to sell UTPs for 400 million. Farallon-Aurora among the candidates

29 September, Il Sole 24 Ore

The Mps group, currently controlled by the Government, is pursuing its clean-up process of impaired credits launching two auctions (Merlino and Morgana). The Merlino operation is for the transfer of an NPL (secured as well as unsecured) portfolio for an approximate value of 2.5 billion supported by PwC as the advisor. In the meanwhile, the bank has also launched the Morgana project (with Kpmg as the advisor) concerning bad loans for 1.1 billion.

Moreover, the bank is allegedly working also on another operation named Alpha 2 concerning UTPs for about 420 million and approximately 30 holdings in real estate assets. The project is at the final stage, having received the offers in the last few days. Among the candidates, there are Bain Capital Credit, Cerberus and the team formed by Aurora Recovery Capital and the American investor Farallon.

Also other banks are working on their impaired loans. Intesa Sanpaolo is currently carrying two auctions on two NPL portfolios, both for nominal values around 250-300 million. The operations are called Levante, focusing on corporate and real estate holdings, and Luce focused on the photovoltaic industry.

Finally, there is the Ace operation of Banco Bpm, currently the biggest portfolio on the market. The deadline for the binding offers is set for mid-November, and the state guarantee has been requested for a part of the portfolio. The portion destined to Gacs is comprised between 3.5 and 9.5 billion, including a portfolio of leasing credits.

Suorce: Il Sole 24 Ore

Translator: Cristina Ambrosi

Volksbank sold an NPL portfolio for 141 million

03 October, Azienda Banca

The law firm Nctm assisted Banca Popolare dell’Alto Adige S.p.A. (“Volksbank”) for the transfer of an NPL portfolio for a value of about 141 million euro, mainly composed of credits originated in the region of Veneto, for large part backed by commercial properties. The portfolio went to Tiberius SPV S.r.l., whose investors are the funds AnaCap, with the support of Paul Hastings LLP.

The Nctm team was coordinated by da Stefano Padovani, Giovanni de’ Capitani and Matteo Gallanti, with the coordination of Martina Marmo, Bianca Macrina and Alessandra Pirozzolo.

The Paul Hastings team was coordinated by Lorenza Talpo with the collaboration of Gabriella Abbattista and Desirée Catalano, while Patrizio Braccioni followed the legal matters.

Source: Azienda Banca

Translator: Cristina Ambrosi

NPLs and tourism, a treasure worth 15 billion

22 September, Monitor Immobiliare

The tourism-hospitality market in Italy still offers many investment opportunities. Bad loans are an occasion for whom wants to invest, especially in tourism.

The figures

In 2017 the investments in the hospitality market were 1.6 billion euro, 60% of which were from international investors, representing 1.1 billion. On the overall, investment volumes have grown by 7.2% since 2016. This is a significant result if we consider that 50% of the bad loans on the Italian market are secured by real estate assets, 10% of which are hotels.

There are currently 13-15 billion in touristic assets which can be an opportunity for new projects in the hospitality sector.

Such wealth is attracting an increasing number of investors, domestic as well as international, as the credits are collected mainly through judicial procedures, namely auctions. There is plenty of occasions in the country, if we think that there are approximately 234,430 properties for auctions in Italy, 19% of which in Lombardy. Hotels represent only 1%. We must also consider that there are over 6 million unlet properties which can be potentially used in the market, as a part of them are connected to NPLs.

Therefore, there is a potential and at convenient prices too, but one has to be quick to catch them. Deloitte has expressed this view in its report during the conference “NPL in tourism, an opportunity and a virtuous process”, organised together with the credit management company GMA in Milan which was focused in the tourism-hospitality sector, its growth potential and the opportunities offered by the Italian property market, especially for foreign investors.

As Deloitte highlights in its report, the credit market is currently very active and we see the rise of UTPs (unlikely to pay). The transactions concerning the tourism-hospitality segment have amounted to over 18 billion euro in the past few years, and they’re expected to grow by 15%.

But there’s also the time to consider. In a couple of years, the stock of impaired loans will reduce due to the transfers and the cancellations, resulting in the reduction of the offer of alternative investments.

Although Italy has a considerable stock of NPLs backed by hotels, banks and servicers have still little experience on how to manage them. Therefore, there are still many challenges to create a system to manage this type of assets efficiently.

The interviews

Giorgio Palmucci, Associazione Italiana Confindustria Alberghi president: “NPL are an opportunity for the hospitality sector. Tourism is currently growing, and the Italian hospitality system is seeing the consolidation of its expansion started in 2016. We see that many international players are looking for new opportunities. In terms of investments opportunities, NPLs can provide interesting results”.

Raffaele Paletti, Rescasa president: “Real estate operators must realise that there it’s possible to invest in NPLs also in the hospitality sector. We’re monitoring the apartment market of the touristic sector which is an emerging phenomenon. It’s possible to think of residential properties for touristic use.  For instance, in Milan, many hostels and student houses are opening. We don’t think anymore at hospitality in the traditional interpretation, rather at a complex segment with several categories within”.

Umberto Rorai, Deloitte partner corporate finance advisory: “Italian banks are currently burdened by a 160-billion gross exposure to bad loans, half of which are backed by properties, while the other half is not guaranteed. If we analyse the sector, tourism and hospitality facilities represent between 12 and 15 billion euro in terms of gross exposure. Every year, about 6 billion euro are invested in tourism, whose growth potential is very important for the development of the national economy. We also consider impaired loans before they turn into non-performing loans since they represent an equivalent exposure concerning net value”.

Source: Monitor Immobiliare

Translator: Cristina Ambrosi

NPL: Cerberus strategically interested in Italy (despite the spread)

28 September, Money.it

If the spread rises, the non-performing loans market will be impacted. Cerberus Capital Management is aware of this, although the interest in the Italian market remains.

Roberto Nicastro, senior advisor of the American fund, confirms this view, as he took part in the seventh editions of the NPL Meeting in Venice organised by Banca Ifis.

Cerberus doesn’t fear the political tensions that usually shake the markets, as it already proved in the past, in Spain during the Catalan crisis and in Great Britain after Brexit.

The impact of spread on NPLs

At the end of the event, Nicastro made some statements to the agency Reuters, stressing, in particular, the effects of spread on the bad loans market, on the demand as well as on the offer side.

“The increase of the spread doesn’t have a positive effect on the NPL market since banks are offering less as the capitals reduce. Meanwhile, investors are impacted by the increase of the cost of funding and equity”, he said.

For Cerberus senior advisor, Italy is still an interesting market at which the American fund look with great interest.

A strategic interest in Italy

Nicastro added that the American investment company wouldn’t be deterred from what is happening in the countries where it has operations planned.

“Cerberus is not that worried. The fund made investments in Spain during the Catalan crisis and in Great Britain after Brexit”, reminded the advisor.

The same will happen in Italy.

He added, “There is no impact in our strategic interest in Italy which is a country of stable volatility or of volatile stability”.

Spread and public finance

Nicastro continued, the spread trend also influences the payments by the public administrations. In fact, the increase if the gap between BTP and Bund creates “a general rigidity of public finance” which expresses in delays in the payments by public administrations.

In the first part of 2018, he reminds as an example, the public authorities took on average 105 days to pay their debts, more than the triple of Germany, where it takes 30 days, and the double of France and Spain, where 50-60 days are necessary.

Moreover, Cerberus has recently entered an agreement for the acquisition of 75% of Officine CST, the Rome-based company operating in the management of credits towards public administrations and unsecured credits.

The service provided by the platform, which-ich manages credits for over 16 billion euro and employs 150 people in Italy, are dedicated to banks, institutional investors, utilities and multinationals, as well as small and medium enterprises.

Source: Money.it

Translator: Cristina Ambrosi

Illimity bought a second NPL portfolio

28 September, Bebeez

Spaxs announced yesterday the acquisition through its subsidiary (currently named Banca Interprovincial, but it will be soon renamed Illimity) of an NPL portfolio for a nominal value of 263 million euro on the secondary market.

The portfolio was sold by Istituto Finanziario del Mezzogiorno spa, and it originates from banks. The portfolio is composed of corporate credits, 30% of which represented by secured loans and with returns aligned with those forecasted by the bank in its business plan.

The operation follows the other one announced on 21st September concerning the acquisition of a portfolio for a nominal value of 155 million. In this way, the NPLs held by bank amount in total to 418 million euro.

Source: Bebeez

Translator: Cristina Ambrosi