MILAN, Oct 7 (Reuters) - Illimity is evaluating potential bids on 2 billion euros ($2.4 billion) of impaired bank loans, a senior executive at the Italian bank said, as disposals resume after the hiatus caused by the coronavirus crisis.
Italy’s 340 billion euro market for problem loans is Europe’s biggest. After more than halving soured debts on their balance sheets in recent years to tackle the legacy of the previous slump, Italian banks are now bracing for an expected wave of defaults caused by COVID-19.
Market activity froze at the height of the healthcare emergency. It is now picking up, though foreign investors are sitting on the fence as they consider higher future risk because of a worsening macroeconomic outlook and slower recoveries.
“When it comes to the impact of the pandemic, we’re simply seeing more caution on the part of international buyers ... they’re offering slightly lower prices for loan portfolios,” Illimity’s head of distressed credit investments, Andrea Clamer, told Reuters on the sidelines of a conference on Wednesday.
“There are fewer international bidders at tenders, but Italy has a fairly good number of domestic players. We’re currently assessing a series of loan portfolios with a gross book value of 2 billion euros.”
Illimity, the digital bank and bad loan specialist founded by veteran Italian manager Corrado Passera, has acquired about 6 billion euros in impaired bank loans since starting operations in 2018.
Loans Illimity is looking at are in default or unlikely to be repaid in full, with a portfolio size that varies between 0.5 billion and 1 billion euros, Clamer said.
Illimity specialises in corporate loans.
Clamer said support measures the government had introduced for borrowers, such as debt holidays, applied only to those with performing loans and prompted some clients to settle non-performing debt to tap the aid schemes. ($1 = 0.8493 euros) (Reporting by Valentina Za Editing by David Goodman)
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