Italy’s ‘good banks’ spark interest
The sale of Italy’s four near-insolvent “good banks” bailed out in a government rescue last year has received 26 expressions of interest from mostly foreign buyers in the latest sign of investor appetite for the country’s troubled banking sector.
The deal comes during heightened focus on the Italian financial system after the government of Matteo Renzi this month orchestrated the creation of a privately-backed €4bn to €6bn fund intended to support weak lenders and promote sales of a vast backlog of bad loans.
The sale includes the assets of four regional banks: Banca Marche, Carife, Banca Etruria and CariChieti, the rescue of which in November was one of the Renzi government’s first attempts to clean up a sector whose bad loans are weighing on Italy’s economic recovery.
Roberto Nicastro, the former UniCredit executive who is chairman of the newly created “good banks” company that holds the four banks, said in an interview that interest for the assets came from “mostly foreign, banks, private equity and insurance”.
Private equity made up the largest number of interested parties and Mr Nicastro said he had checked that the government was prepared to accept what would be the first private equity takeover of an Italian bank as a precondition to him taking on the job of selling the bailed-out lenders.
“It is an option to sell at book value but the best price will win. I am supposed to sell it. I have to maximise the price but there is no reserve price,” Mr Nicastro added.
Mr Nicastro hopes to close the sale by the end of the summer, after being given a tight timeline by EU regulators to sell banks that have combined total assets of €25bn, equal to Italy’s 10th largest bank.
An information memorandum will be sent to 26 prospective investors in the coming days.
Mr Nicastro said the banks’ number of total clients today was in line with levels before the €3.6bn rescue, a deal that forced shareholders and junior bondholders to incur losses.
While small in terms of assets, the bailout of the four banks has had serious ramifications for the valuations of other Italian banks, after the EU agreed a price of 18 cents a euro for their portfolio of bad loans in November.
The price was far lower than the 40 cents in the euro price at which most Italian lenders have bad loans written in their books, triggering a sell off across the banking sector.
This month the Renzi government announced the so-called Atlas fund which will buy junior notes in tranched securitisations of bad loans in an effort to raise their market value.
Italian banks have provided €200bn of loans to borrowers now deemed insolvent, of which €85bn has not been written down on balance sheets. A broader measure of non-performing debt, which includes loans unlikely to be repaid in full, stands at €360bn, according to the Bank of Italy.