June 13, 2018 / 8:45 AM / in 2 months

Italy's Creval sells 1.6 bln-euro bad loan portfolio

MILAN, June 13 (Reuters) - Italian mid-sized bank Credito Valtellinese (Creval) said on Wednesday it had finalised the securitisation of a bad loan portfolio with a gross book value of 1.6 billion euros ($1.88 billion), pushing its shares up more than 4 percent.

Earlier this year the mid-tier bank, known as Creval, raised eight times its market value in cash from investors to strengthen its balance sheet but it is still in the process of shedding bad debt.

In its 2018-2020 restructuring plan, dubbed “Renaissance”, the group aimed to address concerns by Italy’s central bank that the lender may struggle to restore adequate profitability given its high bad loans and operating costs.

The bank sold the portfolio at a price of about 32 percent its gross book value, tapping the so-called GACS state-backed guarantee scheme for the senior tranche, it said in a statement.

The sale reduces Creval’s non-performing loan (NPL) ratio to a pro forma basis of around 11.5 percent as of the end of March compared with the 19.3 percent disclosed previously. The target for the end of 2018 is 10.5 percent.

“With this transaction, the NPL sale plan for 2018 is almost completed,” it said.

Shares in the bank were up 4.2 percent at 0.1 euros by 0810 GMT, outperforming a 0.5 percent rise in Italy’s banking index .

$1 = 0.8514 euros Reporting by Giulia Segreti; editing by Jason Neely

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