Italian banking group UniCredit has reached an agreement with bad loan specialist Prelios for the specialised management of unlikely-to pay (UTP) loans.
Through the partnership, the bank aims to maximise the returns, enhance the value of the non-performing portfolio, and reduce the stock of impaired loans.
Prelios will act as the preferred partner for managing UTP loans held by the bank.
As per the agreement, the bad loan specialist will be given an initial stock to manage in 2022 and new flows of UTP loans for the next six years.
The bank said it worked with Prelios to sell UPTs worth €2bn in a securitisation deal and the firm would act as servicer on the portfolio to recover the loans.
Following the announcement, the Italian bank brokered a deal with Illimity Bank to sell a mixed nonperforming loans portfolio worth around €1.3bn.
UniCredit CEO Andrea Orcel said: “The partnership with Prelios represents a significant step forward in addressing the potential post-pandemic aftermath of Italian companies in a structural manner.
“We are constantly committed to identify the most effective tools to support our customers, in this case favoring their return to better performance along a path of economically sustainable growth over time”
Prelios Group president Fabrizio Palenzona said: “The choice of UniCredit strengthens our position as market leader in the management of UTP credits and allows us to support the real economy of our country, helping to bring the largest possible number of companies back to performing.
“This is the mission that Prelios pursues with strength and with even greater determination and efficiency, collaborating with credit institutions and all those involved.”
The news comes as UniCredit tries to sell its Russian operations and exit the country in the wake of Moscow’s invasion of Ukraine.