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Financials

First bad loan sale with Italian state guarantee ready for launch

MILAN, July 11 (Reuters) - The first sale of a bad loan portfolio backed by an Italian state guarantee scheme is ready and could be launched in the next few weeks, one of the sale advisors said on Monday.

Italian banks have piled up around 200 billion euros ($220 billion) in non-performing loans and have so far resisted pressure to shed them because the price at which specialist investors would buy them is, in many cases, lower than their book value.

The government has set up a guarantee scheme banks to bridge part of the price gap and spur bad loan sales.

Real estate group Prelios, consultant PriceWaterhouseCoopers and JP Morgan are advising small unlisted lender Banca Popolare di Bari in selling a 500 million euro bad loan portfolio backed with state guarantees.

Banca Popolare di Bari’s transaction could open the way to other similar deals in coming months.

“We are ready to launch the transaction for Popolare di Bari as soon as the government rubber stamps the decree on the guarantee scheme,” Riccardo Serrini, head of Prelios’ unit specialising in debt collection and real estate management, told Reuters, adding the decree could be approved in weeks.

Under the scheme, Banca Popolare di Bari will put its bad loans into a special purpose vehicle that will wrap them into securitised bonds and attach a state guarantee to the less risky ones, the senior tranche. This will make the senior tranche more appealing for investors, according to Serrini.

“The state guarantee widens the group of potential buyers and reduces the yield wanted by investors,” Serrini said.

He added that institutional investors such as banks, insurance groups and pension funds would be among potential buyers of the senior tranche. ($1 = 0.9053 euros) (Reporting by Francesca Landini; Editing by Ruth Pitchford)

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