MILAN (Reuters) – Italy’s State-owned bad loan manager AMCO and real estate group Prelios said on Friday they agreed with Monte dei Paschi (MI:), UBI Banca (MI:) and Banco BPM (MI:) to launch a platform to help banks offload impaired property loans.
Italy’s banks have been shedding their worst-performing loans over the past few years to comply with regulatory demands to tackle the legacy of a deep recession, but have now turned to unlikely-to-pay (UTP) loans which are not yet in default but are unlikely to be recovered in full.
Under the agreement, the banks and AMCO will transfer small to medium sized real-estate UTP loans repackaged as securities to a new fund for an initial value of around 450 million euros ($501 million), AMCO and Prelios said in a statement.
This will allow banks and AMCO to spin-off these credits form their 2019 full-year results, they said, adding they targeted a 1.5 billion euro final portfolio for the fund.
Prelios will manage the fund.
AMCO, which is fully owned by the Treasury, has grown to play a key role in Italy’s bad loan market after taking on the impaired debts of two regional lenders wound down in 2017.
Earlier this year it bought a portfolio of soured loans with a gross book value of 2.8 billion euros from ailing lender Banca Carige (MI:), and it prepares.
According to sources, AMCO could also take on some 10 billion euros in impaired debt from Monte dei Paschi, in a deal which Italy has been negotiating for months with EU competition authorities.
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