July 31, 2019 / 12:07 PM / 4 months ago

Italy's Intesa clinches 10 bln euro soured loan deal with U.S. hedge fund

MILAN, July 31 (Reuters) - Italy’s biggest retail bank Intesa Sanpaolo has agreed to sell 3 billion euros ($3.3 billion) in problem loans to U.S. hedge fund Davidson Kempner, moving closer to a 2021 target of cutting soured debts to 6% of total lending.

The management of a further 6.7 billion euros in soured corporate loans will be handed over to Prelios, a bad loan specialist owned by Davidson Kempner.

The deal is the biggest transaction in Italy so far involving so-called ‘unlikely-to-pay’ (UTP) loans, which are not yet in default but are deemed unlikely to be repaid in full.

In reporting a higher-than-expected net profit for the second quarter of 2019, Intesa said the 3 billion euro UTP portfolio would be sold to Prelios for 2 billion euros, in line with its book value.

It did not disclose the fees it would pay to Prelios for trying to recover the loans taken under management, saying only they were in line with market terms and included a large variable component.

$1 = 0.8973 euros Reporting by Valentina Za, editing by Silvia Aloisi

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