November 16, 2018 / 7:07 PM / 6 months ago

Italy's Popolare Bari, others shed bad loans in 1.58 bln euro deal

MILAN, Nov 16 (Reuters) - Italian regional lender Popolare di Bari said on Friday it had concluded a securitisation sale together with 16 other small banks to shed 1.58 billion euros ($1.8 billion) in bad loans.

The 17 banks transferred the loans to a securitisation vehicle dubbed POP NPLs 2018, which issued 492 million euros in asset-backed securities to finance the purchase.

Popolare di Bari said the riskier notes issued by the vehicle, for a total of 66 million euros, had been bought by institutional investors.

The banks involved in the deal will each keep a portion of the 426 million euro senior tranche, tapping a state guarantee scheme that lowers the risk on the notes to the level of government debt.

Popolare di Bari, headquartered in the southeastern Apulia region, accounted for nearly 730 million euros worth of the loans being sold.

The deal is estimated to reduce the troubled bank’s bad loan burden to around a fifth of total lending. That compares with an impaired loan ratio of 8.3 percent at Italy’s top bank UniCredit .

Popolare di Bari and JPMorgan arranged the deal.

$1 = 0.8762 euros Reporting by Valentina Za; Editing by Kirsten Donovan

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