EXCLUSIVE UniCredit set to promote 2 bln euros in impaired loans to DK-owned Prelios – sources

The brand of UniCredit Financial institution exterior the corporate’s department in Kiev, Ukraine, March 30, 2016. REUTERS/Gleb Garanich

MILAN, Feb 9 (Reuters) – Italian financial institution UniCredit (CRDI.MI) plans to promote round 2 billion euros ($2.29 billion) in impaired money owed to unhealthy mortgage specialist Prelios after halting a course of to rent a debt restoration agency for the portfolio, three sources near the matter stated on Wednesday.

The deal will beef up belongings managed by Prelios simply because the group evaluates a potential preliminary public providing or a tie-up to permit its proprietor – U.S. funding fund Davidson Kempner Capital Administration – to money out, bankers stated.

New York-based DK took Prelios personal in 2018 after launching a buyout provide for the Milan-based group, which is one in all Italy’s main unhealthy mortgage managers.

Some 250 billion euros in impaired loans offloaded by the nation’s lenders prior to now few years have turned Italy into Europe’s greatest marketplace for distressed financial institution debt.

A sale would decrease UniCredit’s impaired loans shut to three.1% of whole lending, primarily based on Reuters calculations, in contrast with 3.6% on the finish of December once they totalled 16 billion euros. That compares with 61 billion euros in mid-2016 when UniCredit launched into a restructuring.

Each UniCredit and Prelios declined to remark.

The portfolio contains “unlikely to pay” (UTP) loans, which aren’t but in default however are unlikely to be repaid in full, with a mean measurement beneath 5 million euros every, the three sources stated.

In December Reuters had reported UniCredit had despatched out teasers to pick a debt restoration agency for a UTP portfolio price round 1 billion euros. learn extra

The sources stated the choice course of, generally known as Mission Tiger, had been halted and the sale of the larger portfolio to Prelios agreed.

With round 30 billion euros of impaired money owed below administration, Prelios specialises in UTP loans. In 2019, the corporate struck a landmark UTP partnership with rival banking heavyweight Intesa Sanpaolo (ISP.MI).

Intesa final week stated it may strengthen that partnership as it really works to whittle down its drawback loans below a brand new technique to 2025.

Recovering UTPs is extra advanced and dear than liquidating defaulted loans, usually entailing debt restructuring, turnaround plans and new funding to return companies to well being.

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Reporting by Valentina Za; modifying by Agnieszka Flak and Jane Merriman

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