ROME (Reuters) - Italy is studying changes to the country’s securitisation rules in order to help banks shed so-called ‘unlikely-to-pay’ (UTP) loans, a document seen by Reuters showed on Tuesday.
Italian banks have drastically reduced defaulted loans on their balance sheets but for the most part they are yet to tackle UTP loans, which are not yet in default but are unlikely to be repaid in full.
The document said the changes would allow securitisation vehicles to provide fresh financing to UTP borrowers with adequate requirements.
Unlike defaulted borrowers, UTP borrowers are often businesses which are still operational, and the best chance of recovering the loans can lie in turning them around.
Reporting by Giuseppe Fonte, writing by Valentina Za, editing by Agnieszka Flak