Italian lender Banca Carige SpA's board of directors approved the bank's strategy to reduce its stock of nonperforming exposures, or NPEs, between 2018 and 2020.
The bank's board also approved entering into agreements to outsource the group's IT systems to IBM Italia SpA, as well as starting the process for authorization of loan disposals as laid down by the ECB. The board also said current market conditions were not conducive to a planned subordinated debt issuance.
The NPE strategy entails the disposal of an additional portfolio of nonperforming loans of up to €1 billion to be selected from a total portfolio valued at around €1.7 billion. The additional portfolio will be disposed of on the market, with senior notes backed by an Italian government guarantee.
The bank plans to launch the sale during the second quarter, to be followed by closing and regulatory derecognition toward the end of the year.
The bank also plans to dispose of and write off unlikely-to-pay exposures valued at approximately €500 million — out of a pool of €3 billion — in 2018, and to dispose of a further €200 million of unlikely-to-pay exposures in 2019.
The disposals and write-offs are expected to bring down NPEs by 57% compared to end-2017 levels, according to the bank. The NPE stock will amount to around €2.1 billion compared to ECB-mandated targets of €4.6 billion for 2018. The gross and net NPE ratios will be 11.6% and 5.8%, respectively.
The bank also estimated the first-time impact of implementation of the IFRS 9 accounting standard at around €280 million, with an impact of 160 basis points to the fully loaded common equity Tier 1 ratio and 8 basis points on the phased-in 2018 CET1 ratio.
The planned disposals will result in a risk-weighted assets upside of 50 basis points on the CET1 ratio, the lender added.