Shares in Monte dei Paschi di Siena rose more than 5 per cent after the boutique fund Quaestio bought a chunk of bad loans from the bank for around €800m.
Milan-based Quaestio said it had bought around 95 per cent of a tranche of €25bn non-performing loans from Monte Paschi. The Tuscan bank is 68 per cent owned by the Italian Treasury, after a government-backed rescue last year.
The deal by Quaestio’s Italian Recovery Fund underlines the slow opening up of a market in Italy’s bad loans, a breakthrough long looked for my European and Italian regulators to ease the Eurozone’s third largest economy of a significant weight on lending.
The Italian banking system accounts for around a quarter of the eurozone’s stockpile of NPLs — by the far the largest in the bloc – built up during Italy’s triple dip recession and as a result of poor lending and supervisory decisions. The bad loans have weighed on banks’ profitability and the wider economy, stifling lending to new businesses.
New dynamism in the Italian economy has started to reduce the stock pile, although the creation of market for NPLs is seen as crucial to their reduction in the short term. The latest data from the Bank of Italy showed the stock of gross non-performing loans fell 5.5 per cent in November to €173bn compared with the preceding month, and were down 6.4 per cent compared with the same month last year.