Italy may acquire roughly 60% of UniCredit's bad loans for MPS sale – Reuters

Italy is planning to acquire roughly 60% of UniCredit SpA's impaired loans worth about €14 billion through state-owned bad loan manager Amco - Asset Management Co. SpA to make the potential acquisition of Banca Monte dei Paschi di Siena SpA more attractive for the lender, Reuters reported, citing sources.

Amco may also rid Monte dei Paschi of some high-risk loans as part of the Italian Treasury's plans to sell the lender, according to the Jan. 6 report.

The Treasury is working on three options to address the legal risks involved in the takeover of the bank, one of the sources told the newswire. It is said to be considering a subordinated loan, with principal potentially being wiped off in certain situations, a guarantee scheme or some type of insurance contract with cash as collateral.

Additionally, Monte dei Paschi is also reportedly looking at a potential settlement with former controlling shareholder Fondazione Monte dei Paschi di Siena, under which €3.8 billion in legal claims it made against the lender could be dropped in exchange for Monte dei Paschi shares.

The Treasury is said to be preparing multiple solutions to address outstanding issues at the lender and aims to have them ready by the end of January to help ease the sale of the lender. It also wants to have a deal ready to be approved at UniCredit's annual meeting in April, according to one of the sources.

However, UniCredit is seeking assurance that the EU and ECB will support the package of measures before signing any nondisclosure agreement to enter formal negotiations, the sources told Reuters.

Monte dei Paschi has mandated Credit Suisse and Mediobanca as advisers, while UBS and JPMorgan are representing UniCredit, the newswire reported. Bank of America and Orrick serve as financial and legal advisers for the Treasury.

Italy took a 68% stake in Monte dei Paschi after its €5.4 billion bailout in 2017, which was approved by the ECB on the condition that the state had to divest its stake by 2021.