UPDATE 2-Intesa to shed $13 bln in bad debts with Intrum deal

From Reuters - April 16, 2018

MILAN (Reuters) - Swedens Intrum Justitia (INTRUM.ST) has filed a binding bid for Intesa Sanpaolos (ISP.MI) debt collection unit in a 3.6 billion euro deal that rids the Italian bank of 10.8 billion euros ($13 billion) in bad debts.

The deal, which Intesas board will discuss on Tuesday, values the unit at 0.5 billion euros and the bad loans at 3.1 billion euros, implying an overall net capital gain for the bank of 400 million euros, Intesa said.

The deal significantly boosts Intrums presence in Europes biggest problem loan market, after its acquisition of Italian debt collection firm CAF in December. For Intesa, it marks a change of tack after the bank bet for years on slower internal recoveries of soured debts.

In separate statements confirming earlier Reuters reports, Intesa and Intrum said the Scandinavian group would take 51 percent of a joint-venture combining Intesas recovery business and Intrums Italian operations.

In charge of around 40 billion euros of soured debt and with a 10-year exclusive servicing accord with Intesa, the new entity would become one of Italys biggest collection firm.

Italian banks still hold some 285 billion euros in troubled loans four years after a deep recession that pushed them to 360 billion euros.

Such risky assets, which normally yield double-digit returns, are high on the radar of international investors who have also been snapping up Italian debt collectors in the past two years.

Yielding to strong regulatory pressure to speed up the clean up of its balance sheet, Intesa in February announced it would halve its soured loans to 6 percent of total lending under a new four-year plan.

Italian banks - including Creval (PCVI.MI), Carige (CRGI.MI) recently and, back in 2015, UniCredit (CRDI.MI) - have used the sale of their debt collection units to cushion the hit from the disposal of bad loans.


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