Non-performing loans (NPLs) have reached systemic levels in Italy. Earlier this year during a discussion in Milan, experts considered the outlook for future portfolio sales.
Distressed debt funds are closely looking at Italy and the vast amount of NPLs held by domestic banks.
Antonio Lombardo, a Partner at DLA Piper, believes there is likely to be more portfolio sales in the future. However, he notes that different expectations on price are currently scuppering deals. Speaking on the sidelines of Debtwire's Italian Restructuring Forum, Lombardo says "The trouble we have in Italy different to more mature markets like Spain, Germany and UK is certainly quite a wide gap between ask and bid [price]. This adversely affects the number of transactions."
The steady rise in bad loans during 2015 highlights the continued pressure on the Italian banking sector to act. Data on the market is available to download from PwC. Speakers on his panel at the event in April considered how the market is evolving, including how consolidation in the banking sector may be a driver to accelerate NPL disposals and what solutions banks are implementing to manage portfolios.
The panel agreed regulatory and systemic changes are needed in order to improve the efficiencies of the market. While the trend in Europe for NPL disposals is increasing, Lombardo expects Italy to be late to the party. "I'm pretty certain this market will surge pretty rapidly," he concludes, citing that the government is focussed on trying to support the market and that some efforts have already had a positive impact.
For more information about Debtwire's Italian Restructing Forum and what makes it the leading Italian banking confrence, visit the event website today.
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