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„Italy Bad Bank“ sparks keen U.S. Investor’s interest

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Central bank data issued last week showed bad loans reached a high of 197 billion euros ($223 billion) in July. The rising stockpile is hindering banks’ ability to expand lending and holding back the country’s recovery from a record-long recession.

U.S. investors have shown “an especially keen interest” in buying non-performing loans once Italy sets up a bad bank, Filippo Taddei an economic adviser for Prime Minister Matteo Renzi said in an interview. “Interested parties range from hedge funds to institutional investors, both Italian and foreign.”

Italy is seeking to speed up banks’ disposals of bad loans to free up resources for lending by setting up a so-called bad bank. The government is in talks with the European Commission to find a solution that complies with state-aid rules, because the vehicle that will buy problematic loans from lenders might be financed by government-backed bonds and by public money. Some investors would prefer that state-guaranteed bonds be eligible as collateral at the European Central Bank for credit operations. Bad loans purchased by a bad-bank vehicle may be sold or managed for recovery. “At the end of the day, you want the people that hold the asset and place the asset on the market  to posses the tools to increase their value.“  Taddei said.

“The creation of a bad bank would free-up resources and capital, so this is a positive news for markets,” said Francesco Confuorti, chief investment officer at Advantage Financial SA, a Milan-based investment firm.  Renzi’s government has also sped up the time it takes creditors to seize assets to recover money lent to clients, a move that should also boost NPL disposals. “We are very open to foreign participation. We are already seeing foreign money going into financial markets.”said earlier on the occasion of "Bad Bank Plan" Italian Finance Minister Pier Carlo Padoan.

 

Jr.Trader G.Hristov


 Varchev Traders
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