Intrum Italy's CEO aims for acquisition once horizon clearer

CERNOBBIO, Italy, Sept 30 (Reuters) - Intrum, Europe’s biggest manager of bad loans, still plans to grow through acquisitions in Italy, but first needs to be able to assess the impact of the coronavirus pandemic, the head of its Italian business said.

Talks to buy Milan-based Cerved’s debt collection unit to expand in Europe’s biggest market for soured bank loans fell through because of the coronavirus pandemic.

Sweden’s Intrum established a significant presence in Italy in 2018 with a 3.6 billion euro deal with bank Intesa Sanpaolo to set up a joint venture, of which it owns 51%.

“We want to become the No.1 in Italy so we’re open to a strategic transaction,” Intrum Italy CEO Marc Knothe told Reuters on the sidelines of Banca IFIS’ annual ‘NPL Meeting’.

Knothe said Italy’s loan collection industry was expected to consolidate further in 12-24 months as private equity funds looked for an exit.

Intrum is always in contact with potential counterparties but talks with Cerved remain on hold, he added.

“The transaction was halted and we’re sitting tight, we need to understand what happens first,” Knothe said.

The pandemic is expected to drive a new surge in problem loans after Italian banks worked hard in recent years to tackle the legacy of the previous slump.

IFIS forecast soured debts in Italy, whether still on bank balance sheets or offloaded onto the market, could rise to 385 billion euros next year from 324 billion in 2019.

Intrum expects a 50-100 billion euro increase in 2020-2021.

Knothe told the conference that the pandemic had dampened the prices of small soured loan portfolios, but larger packages still attracted strong interest, though from fewer foreign investors than in the past, and competition supported prices.

Reporting by Valentina Za; Editing by Alexander Smith