Italy’s UniCredit is planning to sell bad loans worth more than €1.5bn ($1.7bn) to banks in the country, Bloomberg has reported citing sources familiar with the matter.
UniCredit believes that the Covid-19 pandemic has not yet dented the Italian credit market. The bank has already reduced its non-performing loan (NPL) ratio to 4.9% as of March 2020.
At present, the lender is aiming to offload as much as €700m of unsecured non-performing corporate loans, the report added.
It is currently in talks with Illimity Bank and Guber Banca for the same.
In a separate deal, UniCredit has neared an agreement with Banca Ifis to sell its non-performing unsecured Individual credit portfolio worth €800m in Italy.
The portfolio comprises Salary Backed Loans (CQS) with a claim value of nearly €155m and unsecured consumer loans worth €180m, of which €30m have been already disposed.
As a result, so far UniCredit has reached an agreement with Banca Ifis for offloading €335 worth bad debts, according to Bloomberg.
The move is in line with the Milan-based bank’s on-going efforts to mitigate non performing exposures and risks.
The deals with Illimity Bank, Guber Banca and Banca Ifis, if successful, will be the first of the €8bn worth NPLs that the lender is disposing in bundles.
These include €2.5bn of bad loans split between Lisbona, Tokyo and New York, €3bn of ‘unlikely-to-pay’ loans through Dawn and Sandokan, and €2.5bn of leasing loans.
The transactions are expected to be finalised by the end of this month.