The Italian NPL Market

This publication provides on a regular basis an update (in english) on the Non Performing Loans (NPL) market in Italy.


The Italian NPL market
The Place To Be

July 2017

The Italian NPL market is now definitively “The Place To Be”, due to the volumes of NPL, the highest in Europe yet (€ 324bn of GBV at the end of 2016) and the recent trends in the Italian NPL arena. Ailing banks are going through a restructuring process, significant banks are engaged in massive NPL deleverage plans, overall the NPL management is passing through a prominent overhaul under new ECB guidelines and the NPL servicers are experiencing a deep evolution and facing consolidation manoeuvres.

Lastly, the recent amendments of the Italian law on securitization on June 2017, allowing the SPVs to purchase the asset securing securitized receivables (including assets subject to leasing agreements), will result in a higher number of transactions by encouraging more players, both originators and investors, to enter this market.

These latest trends in the market witnesses the importance the Italian banks are gradually attributing to the issue of their Unlikely to Pay exposures (GBV equal to €117bn and NBV to €87bn). In this respect, ECB guidelines provide a great opportunity to renovate and improve the proactive management of NPL to address the issue of their massive stock.

ECB guidelines will require the adoption and implementation of a renovated strategic management along with a structured deleverage approach. Furthermore IFRS9, in place from 1 January 2018, will lead to an «early warning» and «forward looking» approach, which could likely result in higher reclassification of performing loans to NPL and overall higher provisions. 

Based on the trends and movements observed in the market, we expect that the NPL transactions’ volumes could easily reach and overcome € 60 billion in 2017.

Looking at the current trends, we see the Italian NPL market as “The Place To Be”. The environment became vibrant and dynamic and it is where the need and the long for innovative solutions will lead to deals, restructuring and internal reorganization opportunities, to not miss out, for a wide audience. 

 

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