MILAN, Nov 7 (Reuters) - Italian regional bank Credito Valtellinese plans to sell up to 1.5 billion euro ($1.7 billion) in bad loans repackaged as securities making use of a state guarantee scheme, three sources close to the transaction said on Monday.
Italy introduced the GACS state guarantee last year in an effort to help its lenders fetch a better price for their bad debts as regulatory pressure mounted to shed 200 billion euros ($221 billion) in loans to insolvent borrowers.
Used so far only by Popolare di Bari, the GACS scheme faces a major test in Monte dei Paschi di Siena’s planned record sale of 28 billion euros worth of bad loans.
Confirming a press report, the sources said Mediobanca and JPMorgan were acting as joint-arrangers and financial advisers for Creval’s bad loan securitisation. They are also joint bookrunners together with Banca IMI.
Shares in Creval rose 6 percent by 1020 GMT outpacing a 3 percent gain in Italy’s banking stock index.
Creval, which last month shed its cooperative status as demanded by a government reform aimed at spurring mergers, declined to comment. The bank held 5.3 billion euros in gross problem loans at the end of June, with bad loans amounting to roughly half of the total.
News of Creval’s bad loan sale was first reported on Sunday by Il Sole 24 Ore daily. The paper said the bank would unveil it on Wednesday, when it presents its 2017-2018 action plan which will also include around 300 job cuts.
One of the sources said the bank may not give exact figures on bad loan disposals in its plan.($1 = 0.9049 euros) (Reporting by Valentina Za and Andrea Mandala, editing by Francesca Landini)