Saturday , October 12 2019
Breaking News
Home / International Customs / Italy / Italy’s Intesa clinches 10 billion euro soured loan deal with US hedge fund
Italy’s Intesa clinches 10 billion euro soured loan deal with US hedge fund

Italy’s Intesa clinches 10 billion euro soured loan deal with US hedge fund

MILAN: Italy’s biggest retail bank Intesa Sanpaolo (ISP.MI) has clinched a deal with U.S. hedge fund Davidson Kempner over 10 billion euros ($11 billion) in problem loans, moving closer to a 2021 target of cutting soured debts to 6% of total lending.

In reporting a higher-than-expected net profit for the second quarter, Intesa said it would sell 3 billion euros in so-called ‘unlikely-to-pay’ (UTP) loans to Prelios, a loan recovery specialist owned by the New York-based fund.

The loans will be sold at book value, or two-thirds of their face value. Under the deal, Prelios will also take under 10-year management a further 6.7 billion euros in corporate UTP loans.

Intesa did not disclose the management fees, saying only they were in line with market terms and included a large variable component.

Recovering UTPs can be more complex and costly than liquidating defaulted loans, often entailing debt restructuring, turnaround plans and new investment to return businesses to health.