August 7, 2019 / 10:55 AM / a month ago

Italy's Creval ready to sell 800 mln euros of bad loans

MILAN, Aug 7 (Reuters) - Italian mid-sized bank Creval will accelerate its proposed 800 million euro ($895 million) disposal of bad loans, halving its impaired debt burden earlier than expected, it said on Wednesday.

Under a five-year plan unveiled by new Chief Executive Luigi Lovaglio in June, Creval is placing its problematic loans into a separate unit and aims to lower its bad-loans ratio to 6.5% of total lending by 2023, down from 11.4% at the end of June.

“We said we intended to sell (more) non-performing loans in 2020, but we want to accelerate and try to do it as quickly as possible, hopefully by the end of the year,” Lovaglio told analysts.

The Italian lender on Tuesday reported a sharp rise in net profit in the first half of the year, rising to 23.5 million euros from 0.8 million euros in the same period last year, helped by tax benefits and a one-off capital gain from disposal of one of its credit businesses.

Lovaglio said the bank had already written down the loans to be sold, offsetting the hit with one-off capital gains.

The bank raised 700 million euros in new capital last year to fund a clean-up of its balance sheet to improve the prospects for an eventual merger deal.

The capital increase, equivalent to about eight times Creval’s market value at the time, has also changed the bank’s shareholder base, with institutional funds replacing small savers that had traditionally been its core investors.

Creval’s shareholders, led by French businessman Denis Dumont, pushed through a management overhaul last autumn, leading to the appointment of former bank Pekao boss Lovaglio at the helm.

A spokesman for Dumont on Wednesday said he had raised his stake to 9.9%, becoming the bank’s single largest shareholder, after buying a further 1.7% following Creval’s business plan presentation. ($1 = 0.8934 euros) (Reported by Andrea Mandala Editing by David Goodman)

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