February 9, 2018 / 8:23 AM / a year ago

Italy's UBI Banca to sell "substantial" bad loan package over 3 yrs

MILAN, Feb 9 (Reuters) - UBI Banca said on Friday it planned to sell a “substantial package” of bad loans over the next three years in an acceleration of efforts to clean up its balance sheet.

The bank said its aim was to speed up progress towards a gross non-performing loan ratio of less than 10 percent between 2019 and 2020, depending on market conditions.

“If market conditions allow ... we could achieve these objectives as early as 2019,” Chief Executive Victor Massiah said in comments accompanying the company’s results release.

In 2017, UBI Banca’s had customer loans of 92.3 billion euros ($113.34 billion). Gross non-performing loans totalled 13.8 billion euros, the equivalent of 14.03 percent of its total gross loans.

The European Central Bank has stepped up pressure on Italian banks to offload debts that turned sour during the country’s recession which ended in 2014.

Earlier this week, Italy’s biggest retail bank Intesa Sanpaolo said it would halve its impaired loan burden under a new four-year plan, while the country’s third largest lender Banco BPM stepped up its target for shedding bad debts by 5 billion euros.

UBI Banca, Italy’s fourth biggest bank by market value, reported a 2017 net profit of 690.6 million euros, including results from the three small rivals it bought last year.

This compares with a loss of 830.2 million euros on a standalone basis a year earlier.

The bank said its fully-loaded CET1 ratio - an indicator of financial strength - stood at 11.43 percent, including a planned dividend payout of 0.11 euros per share. ($1 = 0.8144 euros) (Reporting by Stephen Jewkes. Editing by Jane Merriman)

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