Fortress to Buy ‘Significant Portion’ of UniCredit’s Bad Loans

Fortress Investment Group LLC agreed to buy part of a portfolio of Italian lender UniCredit SpA’s non-performing loans, in the biggest example of such a deal in Europe.

The alternative-asset manager will acquire a “significant portion” of UniCredit’s 17.7 billion-euro ($18.4 billion) package of Italian loans, it said in a statement Monday.

The deal builds upon Fortress’s history of buying non-performing loans in the country, including 13 billion euros of such debts from Intesa Sanpaolo SpA in 2005, and its acquisition of UniCredit Credit Management Bank SpA last year. Since 2000, the firm and its affiliates have already bought 22 billion euros of bad loans in Italy, according to the statement.

The deal comes amid increased pressure from the European Central Bank and Italian government for the nation’s financial sector to offload bad assets because of concern that some of the weakest lenders will fail.

Private equity firms including KKR & Co., Blackstone Group LP and Apollo Global Management have ramped up their European credit business to fill a void left by banks hampered by heightened capital standards. Anemic economic growth isn’t helping lenders either: Europe’s banks have about $1.3 trillion of bad loans, according to an October report from KPMG LLP.

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