The bad bank of Intesa Sanpaolo and Unicredit takes shape. Today the two banking groups formalized the memorandum of understanding to "develop and implement together an innovative solution aimed at optimizing performance and maximizing the value of a selected portfolio of loans being restructured". A solution that has been talked about for some time and whose finalization was anticipated last night by the Financial Times which notes that it is "a rare example of European banks joining forces with some of the many private equity and hedge funds present in the financial system of the Old Continent in search of opportunities to grab assets from capital-hungry lenders”.
Of course, Unicredit and Intesa do not want to hear about a real bad bank: it is an agreement that concerns loans that have not yet deteriorated without the intention of disposing of them, which aims to bring the companies concerned back to profitability, making use of A&M's consultancy specializes in corporate restructuring. Alvarez & Marsal in fact links its name to the restructuring of the bankruptcy of Lehman Brothers.
Since the discussion has come alive, the gross bad debts of the banking system they rose again to the record of 162 billion. With this operation, the path of those who favor solutions undertaken by individual banks in random order and not a systemic solution seems to be consolidating. However, this project is still today seen by some as the preferred solution. Last week, the deputy general manager of Bankitalia Luigi Federico Signorini, speaking in the Chamber, reported that the Bank of Italy would be in favor of implementing measures of a more general scope". “On the question of the bad bank, I refer to what the governor said – said Signorini – a strong impact on the banks' balance sheets of doubtful loans is not positive and the way to manage these loans is very important. We welcome the initiatives by numerous banks and we would not look badly at more general measures". Even the Abi, the trade association of banks, would be in favor of a systemic solution. Bankers actually put the emphasis above all on "money". For the president of ABI, Antonio Patuelli, "a bad bank promoted by the government would be useful, which should provide, as in other Western countries, some resources, or some tax incentives". He said it a few days ago speaking on the Mix24 radio show, specifying that "However, we must avoid creating a bad bank bandwagon, or a constraint for others, which is a superstructure with respect to existing structures".
The risk that a system solution, however desirable, will be interpreted as a bandwagon it was also feared some time ago on Firstonline by Adriano Bianchi, Managing Director of the Italian division of the same consultancy company (A&M) which is managing the Intesa-Unicredit-Kkr dossier. "Talking about system operations - he told Firstonline - however shouldn't mean guaranteeing the survival of all the subjects involved (both on the creditor and debtor side) and this, in Italy (the country of Efim, of of State in liquidation for over 30 years), is not so obvious. We are therefore faced with two contrasting and hardly compatible needs: if a system operation is carried out, in order to be effectively effective - and not simply be financial speculation or a new bandwagon that absorbs the already scarce resources available - it should be governed with private criteria but at the same time ensure that no one can refuse to participate".
On the other hand, Italy is one of the few countries that has not given non-repayable money to the banks. In contrast, bad banks, where implemented, seem to get away with it. Just a few days ago Nama, the Irish bad bank, managed to complete its largest sale of non-performing loans, a 1 billion package to private equity Cerberus. On the back of surging international interest in Irish assets, there is now debate as to whether or not Nama can accelerately liquidate the assets and close ahead of its scheduled maturity in 2020. Nama chairman Frank Daly said But recently noted that early closure will not bring the best returns for taxpayers and that Nama's success is threefold: it will pay off both senior and subordinated debt and the prospect is that it will even make a profit. In Spain, the bad bank Sareb after a hesitant flight managed to rack up several sales and at the end of 2013 had raised 3,8 billion euros. A result in line with expectations, albeit marked by a loss at the end of the year of 261 million euros.
