Credit Agricole Said to Start $7.5 Billion Italy Loan SaleBy , , and
Bank is selling NPLs bought from other institutions years ago
Non-binding offers are due by end of March, closing by June
Credit Agricole SA is seeking to sell about 6 billion euros ($7.5 billion) of Italian non-performing loans bought from other institutions a decade or more ago, according to people with knowledge of the matter.
The French bank is trying to offload its holdings in four different bad-loan securitizations, along with the Luxembourg-based entity that issued them, said the people, who asked not be identified because the matter is private. The vehicles were created between 2006 and 2008 when Credit Agricole’s investment-banking unit purchased and securitized the loans, they said.
A Credit Agricole spokesman declined to comment.
Credit Agricole has extensive business in Italy, including corporate and investment banking. Last year, the French lender had more than half a billion euros of profit from the country, its second-biggest market. The bank expanded in Italy last year with acquisitions in asset management and retail banking, while its provisions for bad loans in the country fell 22 percent.
Appetite for troubled Italian debt is increasing as the country’s economic rebound raises expectations for better recovery rates. The European Central Bank is increasing pressure on Italy’s banks to clean up balance sheets that are weighed down by more than 270 billion euros of non-performing loans, more than twice the amount held by lenders in any other European Union country.
“This is very positive momentum for selling Italian bad loans, as the valuations are increasing thanks to a better economic outlook and measures to ease bankruptcy proceedings,” said Wolfram Mrowetz, chief executive officer of Italian broker Alisei SIM. “New players are entering in the market lured by the prospects of good returns from such investments.”
Credit Agricole, which hired KPMG to advise on the sale, is accepting offers for the whole amount or part of it, the people said. The portfolio, dubbed project Poppy, includes Italian secured, unsecured, consumer debt, and loans to small-and-medium enterprises, with a large exposure to southern and central regions, the people said. Non-binding offers are due by end of March, as the bank plans to close the sale by June, they said.
— With assistance by Alastair Marsh