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Italy's Intesa clinches 10 billion euro soured loan deal with U.S. hedge fund

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By Reuters
Italy's Intesa clinches 10 billion euro soured loan deal with U.S. hedge fund
The Intesa Sanpaolo logo is seen in Milan, Italy, in this January 18, 2016 file photo. To match Insight ITALY-BANKS/FUND REUTERS/Stefano Rellandini   -   Copyright  Stefano Rellandini(Reuters)
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MILAN (Reuters) – Italy’s biggest retail bank Intesa Sanpaolo <ISP.MI> has agreed to sell 3 billion euros (£2.75 billion) in problem loans to U.S. hedge fund Davidson Kempner, moving closer to a 2021 target of cutting soured debts to 6% of total lending.

The management of a further 6.7 billion euros in soured corporate loans will be handed over to Prelios, a bad loan specialist owned by Davidson Kempner.

The deal is the biggest transaction in Italy so far involving so-called ‘unlikely-to-pay’ (UTP) loans, which are not yet in default but are deemed unlikely to be repaid in full.

In reporting a higher-than-expected net profit for the second quarter of 2019, Intesa said the 3 billion euro UTP portfolio would be sold to Prelios for 2 billion euros, in line with its book value.

It did not disclose the fees it would pay to Prelios for trying to recover the loans taken under management, saying only they were in line with market terms and included a large variable component.

(Reporting by Valentina Za, editing by Silvia Aloisi)

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