Unicredit agrees €17.7bn bad loan sale with US investors Pimco and Fortress


Unicredit agrees €17.7bn bad loan sale with US investors Pimco and Fortress
  1. Unicredit agrees €17.7bn bad loan sale with US investors Pimco and Fortress
    hitc.com
    Italian banking giant Unicredit has agreed to sell off a big portion of its book of bad loans to US investors Pimco and Fortress, in its latest step to leave the legacy of the Eurozone debt crisis in the rear-view…
    Business

Italian banking giant Unicredit has agreed to sell off a big portion of its book of bad loans to US investors Pimco and Fortress, in its latest step to leave the legacy of the Eurozone debt crisis in the rear-view mirror.

The deal, first announced last year, will see the American firms take on a €17.7bn (£15.5bn) tranche of non-performing loans at a bargain basement price, as Unicredit tries to shore up its balance sheet.

The sale will increase Unicredit’s tier-one equity capital ratio by 10 basis points, the bank said, meaning it will be more resilient in the eyes of regulators in the case of a crash.

Increasing banks’ capital ratios has been a key concern of European banking regulators since the Eurozone debt crisis left lenders across the continent exposed.

Read more: UniCredit just confirmed it is billions of euros in the red for 2016

Italy’s banks were particularly badly hit: non-performing loans (NPLs), or those which have not been serviced for 90 days, grew to eye-watering levels when the recession hampered borrowers’ ability to meet repayments. In May the Bank of Italy’s governor said the country's banks still held a nominal value of €350bn in NPLs at the end of 2016.

Unicredit, the largest bank in Italy by assets, was at the centre of the storm, with €11.8bn in losses in 2016 mostly caused by one-off writedowns as part of its turnaround plans.

The bank has since embarked on an ambitious cost-cutting plan, with thousands of jobs cut at branches…

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