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Italy set to introduce measures to boost soured loan securitisations
May 29, 2017 / 3:10 PM / 6 months ago

Italy set to introduce measures to boost soured loan securitisations

ROME, May 29 (Reuters) - An Italian parliamentary committee on Monday approved measures aimed at helping the country’s lenders sell their soured loans repackaged as securities.

The new rules must be signed off by Italy’s parliament as part of a package on which the government is expected to ask for a confidence vote.

The measures will allow securitisation vehicles to lend money to troubled borrowers to help their impaired loans revert to performing. The vehicles will also be able to buy shares or other equity-like instruments issued by borrowers in trouble.

Such measures could be particularly useful to tackle so-called unlikely-to-pay loans, whose recovery process usually entails a debt restructuring accord which may include a debt-to-equity conversion.

The new rules also allow to set up a company whose sole task is to buy and manage the assets backing the loans, with the aim of supporting the securitisation process.

Italian banks are saddled with 349 billion euros in soured loans following a harsh recession that ended in 2014. Sales have stalled so far due to a pricing gap that would force lenders to sell at a loss, hurting their capital base. (Reporting by Giuseppe Fonte, writing by Valentina Za)

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