June 22, 2018 / 5:15 PM / 9 months ago

Italy's BPER to cut problem-loan ratio to 18 pct with securitisation

MILAN, June 22 (Reuters) - Italy’s sixth-largest banking group, BPER Banca, said on Friday that its problem-loan ratio would fall to 17.8 percent once its Banco di Sardegna unit completed a 900 million euro ($1 billion) loan securitisation deal.

BPER, which holds problem loans equivalent to 19.3 percent of total lending, was the first Italian bank to announce large writedowns of loans earmarked for sale under a new accounting rule that came into force at the beginning of the year.

Problem loans are the focus of market and regulatory concerns over Italian banks.

Banco di Sardegna has transferred 900 million euros in bad loans, among the worst of the group’s problem loans, to a securitisation vehicle at 28.1 percent of their nominal value.

The bank will retain the safer or ‘senior’ tranche of the loan-backed securities, which is wrapped by a state guarantee, and sell on the bulk of riskier notes worth a total of 21 million euros to shift the bad loans off its balance sheet.

The loans being securitised will be serviced by Prelios Credit Servicing, the bank said.

BPER said it was on track to complete another planned 2 billion euro sale of bad loans by the end of the year.

Shares in BPER rallied 7.4 percent on Friday after financial group Unipol raised its stake in the bank to 13.1 percent and said it could boost it further.

$1 = 0.8587 euros Reporting by Valentina Za Editing by Mark Bendeich

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