LONDON, June 19 (Reuters) - Suitors eyeing the debt recovery unit of Banco BPM are expected to take on bad loans for an amount close to the top of a 3.5-10 billion euro ($4-$12 billion) range set by the Italian bank, a source familiar with the bidding process said.
The prospect of a faster-than-expected clean-up lifted shares in Banco BPM by 5.6 percent on Tuesday, outperforming a 1 percent rise in the banking sector.
Banco BPM has recently put on the block a last batch of 3.5 billion euros in bad debts it had earmarked for sale. This would allow it to reach a 13 billion euro disposal target two years ahead of schedule.
Investors can offer to buy more, up to a total of 10 billion euros in bad loans Banco will still hold after a 5 billion euro securitisation sale it is currently finalising.
The source said offers would likely aim for amounts close to the top of the range, virtually ridding the bank of its defaulted loans. Banco BPM would still hold some 9 billion euros in loans unlikely to be repaid in full.
Sources told Reuters on Monday Banco BPM’s latest bad loan sale was drawing strong interest from investors eager to snap up the debt collection unit they can offer to buy with the loans.
Il Sole 24 Ore reported on Tuesday that the amount of bad loans being offloaded in the process could reach 8-9.5 billion euros, above analyst estimates of 7-8.5 billion euros.
With soured loans accounting for 20.5 percent of total lending at the end of March, Italy’s third-largest bank has been dogged by concerns it would need fresh capital to write down bad debts and sell them off. ($1 = 0.8640 euros) (Reporting by Pamela Barbaglia, writing by Valentina Za, editing by David Evans)