Italy government-owned bad loan manager AMCO is reportedly competing with rival Credito Fondiario to acquire Banco BPM’s ‘unlikely to pay’ (UTP) loans worth €1bn.
Banco BPM has significantly reduced its defaulted loan amount on its balance sheets, Reuters reported.
However, the lender is yet to deal with the UTP loans, which have not defaulted yet but are speculated to remain unpaid.
UTP borrowers are mainly businesses that are currently operational, the report added citing sources familiar with the matter.
According to one of the sources, AMCO and Credito Fondiario will submit their offers to BPM by next week.
Earlier this year, Banco BPM CEO Giuseppe Castagna said that the bank has been planning to reduce the bad loan share over total lending.
Banco BPM was reportedly looking to sell its soured loans at the end of this year, but without affecting its capital buffer.
Castagna added that the lender was monitoring the market for the same.
Speaking on a potential deal, a spokeswoman for Banco BPM said that the bank was “still at an exploratory and interlocutory stage with the market”.
Banco BPM recorded €9.8bn in impaired loans, in its second quarter, of which €6.2bn were in UTPs, the Reuters report added.
The ongoing Covid-19 pandemic is anticipated to release a new set of impaired loans once support measures from the government end.