© Reuters. FILE PHOTO: The logo of BPER Banca is pictured outside a branch as the bank’s CEO Piero Montani presents a new business plan, in Milan, Italy, June 10, 2022. REUTERS/Flavio Lo Scalzo/File Photo
By Valentina Za
MILAN (Reuters) -BPER Banca said it had agreed a partnership with Gardant after the loan manager teamed up with state-owned peer AMCO to help the Italian bank offload up to 2.5 billion euros ($2.6 billion) in bad debts.
BPER was the only major Italian bank to still have full control of its debt recovery operations, which comprise staff dedicated to recouping problem loans and the technology they use.
The accord values the business at 150 million euros. Gardant, controlled by U.S. fund Elliott will acquire 70% of the unit, with BPER retaining 30%.
The Gardant-AMCO duo trumped rival bids by Sweden’s Intrum, Davidson Kempner-owned Prelios and Softbank-backed doValue.
Reuters in May was first to report that Gardant had teamed up with AMCO in the hard fought deal for BPER’s division.
Banks normally offload the recovery units at a profit which they use to offset the hit from simultaneous bad loan disposals.
BPER is shedding up to 2.5 billion euros in bad debts as part of the Gardant-AMCO deal.
By the end of the year, BPER will sell a first 1.5 billion euro bad loan portfolio to AMCO, which is able to bid higher than privately-owned rivals in tenders thanks to lower funding costs.
Under a 10-year management accord, the new Gardant-controlled joint venture will handle part of BPER’s existing bad loans, including some of those which it is selling.
It will also get 90% of all new defaulted loans and 50% of new ‘unlikely-to-pay’ loans – which are not yet in default.
Gardant had struck a similar deal with Banco BPM four years ago.
“Our partnership with Banco BPM has been a great success,” Gardant CEO Mirko Briozzo said.
“This deal brings our assets under management (AUM) to around 42 billion euros, turning us into a leading industry player in terms of volumes and collections,” he added.
Gardant had 19.9 billion euros in AUM at the end of last year, according to consultancy PwC’s latest report on Italy’s bad loan market. That compared with market leader doValue’s 75.9 billion euros, according to PwC.
Briozzo said a task force would work in the next few months to get the partnership off the ground and ensure it can soon run at full steam.
Italy has become Europe’s biggest market for soured bank loans as its banks have shed almost 200 billion euros in bad debts since a 2015 peak post-recession peak.
KPMG advised BPER on the deal and Rothschild Gardant. ($1 = 0.9538 euros)
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