AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

MILAN: Italian bank UniCredit has signed a final agreement with US funds Fortress and Pimco on the sale of bad loans worth 17.7 billion euros ($20 billion) in Italy's biggest such deal so far.

UniCredit has led clean-up efforts among Italian banks which have been left with billions of euros of bad loans following the country's deep recession. The total amount of impaired debt is equivalent to around 15 percent of total lending, three times the European average.

Morgan Stanley analysts estimated on Monday that at the current rate of rundown it would take Italian banks some 10 years to lower the share of soured debt over total loans to 5 percent.

UniCredit first announced the deal in December and went on to raise 13 billion euros in a share issue to offset the hit to its balance sheet from loan writedowns that paved the way for the sale.  Rival Monte dei Paschi di Siena had to seek state help after failing to tap markets for cash. The Tuscan bank this month agreed a bailout that will allow it to offload 26 billion euros in bad debts.

UniCredit booked 8 billion euros in loan losses in the fourth quarter partly because it wrote down the bad debt to be sold to just 13 cents to the euro. This represented a lower-than-average price which the Bank of Italy said should not be seen as a benchmark.

The loans have been transferred to vehicles that can sell them repackaged as securities and in which Pimco and Fortress have taken majority stakes.

UniCredit said on Monday the sale would have a negative effect of 30 basis points on its core capital as the positive impact of cutting problem assets was more than offset by the need to re-evaluate the riskiness of its loan book in light of the loss suffered on the portfolio sold.

Bad loan specialist Banca IFIS estimated in a report published on Monday that UniCredit' deal would help to bring overall sales of impaired bank debts in Italy to 104 billion euros this year, after sales totalling 36 billion euros in 2015-2016.

 

Copyright Reuters, 2017
 

 

Comments

Comments are closed.