UniCredit SpA may seek offers as soon as this month for a unit that manages non-performing loans, as Italy’s banks weigh options for moving bad loans off their books, people familiar with the talks said.
UBS AG, UniCredit’s adviser on the sale, is preparing to circulate sales documents known as teasers for UniCredit Credit Management Bank SpA by the end of February, said two people with direct knowledge of the plans. UniCredit, Italy’s biggest bank, is still deciding how much of the company to keep and whether to move some of its bad loans into the unit, the people said, declining to be identified because the preparations are private.
The sale, part of a plan to dispose of non-strategic assets, comes as Italian banks explore options for separating out bad loans. UniCredit and Intesa Sanpaolo SpA, the country’s second-biggest bank, are studying an option to pool some restructured loans and seek investors to control the venture, two people said. Mediobanca SpA is looking into gathering bad loans of smaller lenders into dedicated funds that would draw investors, according to one person.
“Banks may consider the disposal of non-performing loan portfolios, or some of them can join together and set-up a vehicle,” Giovanni Sabatini, director general of the country’s banking association, said in an interview in Rome. “These are individual choices to strengthen capital. We don’t believe that a systemic bad bank in the Spanish style is the appropriate recipe for Italy, because this isn’t a systemic problem.”
Italian banks’ bad loans, at a record high, are curtailing their ability to lend as the country struggles to emerge from its longest recession in two decades. By splitting off some bad debt, the banks would also help eliminate any capital shortfalls that might arise from the European Central Bank’s asset quality review and stress tests this year.
“Italian banks are being lured by the bad-bank successes in Spain and Ireland, and the ECB reviews could put pressure on smaller lenders,” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc in London. “What we’re likely to see are a range of different approaches and asset disposals to free up capital.”
Alvarez & Marsal Inc. is advising Intesa and UniCredit on their plan to pool loans, according to a person familiar with the matter. Officials for Intesa, UniCredit, Mediobanca and Alvarez declined to comment.
UniCredit said in September it was reviewing options for the business, which specializes in non-performing loans servicing and management, appraisal and recovery of credits. It manages about 53 billion euros ($72 billion) of loans.
UniCredit is disposing of non-performing loans and isolating riskier debt. It’s transferring the risk on 910 million euros of subordinated debt to Mariner Investment Group LLC, the lender said last month, and in December reached an agreement to sell a 950 million-euro loan book to Cerberus European Investments LCC.
Intesa, based in Milan, reported a 47 percent decline in third-quarter profit after it set aside more provisions for bad debt. KKR & Co., the private-equity firm run by Henry Kravis and George Roberts, may buy a majority stake in the UniCredit and Intesa pool, La Repubblica earlier reported. An official for KKR in London declined to comment.
Bad loans in Italy rose an annual 23 percent to 149.6 billion euros in November, while non-performing loans as a proportion of lending increased to 7.8 percent from 6.1 percent a year earlier, according to data published by the Italian Banking Association on Jan. 21.
Mediobanca, Italy’s largest independent securities firm, is seeking to draw dedicated investors for the funds it’s studying, according a person. The Milan-based firm has studied the plan for at least a year, two people said.