Italian bank Creval has announced plans to reduce its gross soured loan ratio to below 6.5% in 2023.
The five year plan includes transferring its bad loans to a separate unit and then selling a portion of it to achieve the target. The special unit is expected to hold around €1.9bn worth of bad debts.
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The move will involve selling around €800m in bad loans. According to Reuters, the lender has already sold €4bn in loans since 2016.
It expects that the overall strategy, which also features reducing operating costs, will help to nearly triple its profits by 2021. Last year, Creval registered a net profit of €32m.
Headquartered in Sondrio, Creval was deeply affected during the recession in Italian economy. The new plan is devised to help the company in streamlining its business.
Additionally, the initiatives are expected to help the bank to find a merger partner and consolidate its business.
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By GlobalDataLast year, Creval raised €700m in capital to bolster its capital and support its move to sell bad loans. The capital raising created a strong institutional shareholder base, thereby further supporting expectation of a potential merger.
Creval CEO told the news agency that the lender is open for merger talks, but it plans to spend two years in implementing the latest business strategy.
Creval is not the only Italian lender struggling to increase its profits. A few months ago, Banca Carige was put under temporary administration by the European Central Bank for capital woes.
