February 13, 2014 / 7:00 PM / in 4 years

RPT-UniCredit, Intesa in talks to pool 1 bln euros of restructured loans-sources

By Stefano Bernabei and Gianluca Semeraro

ROME/MILAN, Feb 13 (Reuters) - Italy’s top two banks, UniCredit and Intesa Sanpaolo, are in talks to set up a vehicle to pool restructured loans with a nominal value of 1 billion euros ($1.4 billion), two sources close to the matter said on Thursday.

UniCredit CEO Federico Ghizzoni confirmed this week negotiations were underway between two banks and U.S. fund KKR as Italian lenders strive to clean up their balance sheets while European regulators conduct a sector-wide health-check.

Ghizzoni said a decision would have to be taken by mid-2014.

“The initial nominal value should be around 1 billion euros,” said one of the sources. Another source said more problematic loans could be put in the vehicle later.

As of September 2013 Intesa and UniCredit had a combined 10.6 billion euros ($14.5 billion) in gross restructured loans.

Pooling some of the loans would allow UniCredit and Intesa to sell them and get them off their balance sheet.

The sources said two options were being considered: one was to set up a vehicle for the loans which would then issue asset-backed bonds; a second possibility would be to create a vehicle in which UniCredit and Intesa Sanpaolo could take a stake alongside KKR and corporate restructuring specialist Alvarez & Marsal.

Intesa, UniCredit and KKR declined to comment. Alvarez & Marsal was not immediately reachable for comment.

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