GE, RBS Said in Talks to Sell $4.5 Billion of Italian NPLs

  • Sale is biggest in years as market for bad debt picks up
  • Sellers expected to collect non-binding offer by end Sept.

General Electric Co., Royal Bank of Scotland Group Plc and Credit Agricole SA are seeking to sell about 4 billion euros ($4.5 billion) of non-performing Italian corporate and consumer loans, three people with knowledge of the matter said.

The offer, the biggest in years, is a sign that the market for this debt has picked up since the introduction of laws this year making it easier for creditors to seize assets. Non-performing loans remain a burden for many Italian banks six years after the financial crisis. With the country’s economy expanding again, investors can expect more success in efforts to recover on these debts.

The three firms are selling a package of loans known in the industry as the “Compilation.” It includes secured and unsecured loans to small- and mid-sized firms and individuals, said the people, who asked not to be identified because the discussions are private. The loans were bought between 2007 and 2008 from Italian banks including Banco Popolare SC and Banca Antonveneta SpA.

The sale comes as two of the three sellers retreat from some activities. GE announced plans in April to offload about $200 billion of financial operations worldwide, while RBS is cutting jobs, divesting of assets and retreating from many countries.

“This is the biggest sale of Italian NPLs in recent time and is a further sign that the market is reviving,” said Wolfram Mrowetz, chairman of Alisei Sim, a Milan brokerage, by phone. “The gap between bid and ask is reducing, and I expect increasing numbers of finalized deals looking forward.”

Cerberus Capital Management LP and Banca Ifis SpA bought 1.3 billion euros of non-performing loans from Banca Monte dei Paschi di Siena SpA in June.

At least 10 firms have expressed an interest in the loans since the sale process started, and potential bidders have until the end of September to submit non-binding offers, the people said. Before seeking binding offers, GE, RBS and Credit Agricole will select bidders to be given more information about the loans next month.

Alexandre Barat, a spokesman at Credit Agricole, and Seth Martin, a spokesman for GE, both declined to comment. A spokeswoman in London for RBS also would not discuss the matter.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE