Italy’s banks have done well to reduce exposure to NPLs in recent years, but there remains much work to be done. Katrien Van Hoof reports.

In January, the populist government in Italy decided to intervene on behalf of ailing lender Banca Carige to stave off its collapse. The cabinet pledged to guarantee future bonds issued by the Genoa-based lender, which has been limping along since a make-or-break €400m capital increase failed to get off the ground last year.

If this sparks feelings of déjà vu, then that is no coincidence. Two years ago, Italy’s then centre-left government under Matteo Renzi engineered a similar manoeuvre for Banca Monte dei Paschi di Siena (BMPS), via a “precautionary recapitalisation”. 

According to The Banker’s data, BMPS still has the greatest exposure to non-performing loans (NPLs) of the country’s top five biggest banks by total assets of 16.30% at the end of 2017. But it has come a long way from 22.84% in 2015. The two leading banks, UniCredit and Intesa Sanpaolo, have both successfully sold large NPL portfolios. The former nearly halved its NPL ratio over a three-year period to 2017 to 5.48% through deals with US-based funds such as Fortress Investment Group and Pimco, among others. Intesa Sanpaolo sold €10.8bn of bad loans to credit management company Intrum Justitia.

The only top five bank to have seen an increase in NPLs is Unione di Banche Italiane, Bergamo (UBI Banca). However, this is likely due to having bought struggling lenders Nuova Banca delle Marche, Nuova Banca dell’Etruria e del Lazio and Nuova Cassa di Risparmio di Chieti in 2017. The combined lender has been continuing an NPL disposal programme post-merger.

Carige itself has made headway in offloading some of its non-performing loans portfolio over the past few years, going from 12.76% in 2014 to a peak of 15.60% in 2016 and down to 8.56% of its total loans portfolio at the end of 2017.

data trends 150119

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter