Strategic agreement with Prelios regarding non-performing loans
Intesa Sanpaolo has announced a strategic partnership with Prelios in relation to unlikely to pay (Utp) loans; an operation that Carlo Messina, the Group’s CEO, has called “innovative, the largest of its kind ever conducted in the Italian market and a benchmark for the management of this asset class through a specialised operator”.
The agreement regards 10 billion euro of Intesa Sanpaolo’s total Utp loans of 14 billion euro, shall run for ten years, and is proving highly effective as in this way the Bank, in the first eighteen months of the 2018-2021 Business Plan, has achieved around 80% of its targeted reduction, by the end of the four years, of its non-performing loans. The financial advisors in this operation are Rothschild and Banca Imi, for Intesa Sanpaolo, and Mediobanca for Prelios..
"The objectives regarding non-performing loans indicated in the 2018-2021 Business Plan are a year ahead of schedule”
The agreement with Prelios is based on two fundamental points. The first is represented by a ten-year agreement for the servicing of Intesa Sanpaolo’s Utp loans by Prelios, with an initial portfolio of 6.7 billion euro gross. The second point provides for the transfer and securitisation of a portfolio of Utp loans worth approximately 3 billion euro, at a price of around 2 billion euro.
By means of this transaction, Intesa Sanpaolo reduces the stock of non-performing loans from 8.4% to 7.7% gross, and from 4.1% to 3.6% net. Furthermore, the objectives regarding non-performing loans indicated in the 2018-2021 Business Plan are achieved by the Bank a year ahead of schedule.
Messina has pointed out that also thanks to agreements like that stipulated with Prelios, the quality of Intesa Sanpaolo’s credit continues to improve, as shown by the performance in the first six months when the stock of non-performing loans fell to its lowest level since 2009 “without any extraordinary charges borne by shareholders”.