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Banco BPM's board approves securitization of €5.1B bad loans

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Banco BPM's board approves securitization of €5.1B bad loans

Banco BPM SpA's board has approved the securitization of a portfolio of bad loans with gross nominal value of €5.1 billion to a special purpose vehicle called Red Sea SPV Srl.

The Italian lender said May 31 that the upon completion of the transfer, the vehicle will issue senior, mezzanine and junior offerings. Banco BPM will subscribe to the offerings and subsequently pass on the junior and mezzanine tranches to third-party investors, it said.

The bank is also on the lookout for advisers on the disposal of a further €3.5 billion of bad loans to meet its €13 billion bad loan reduction target.

Banco BPM is also considering selling a portion of its debt servicing unit, Reuters reported, citing sources familiar with the matter. The sale process could be rolled out in the coming weeks, one of the sources said.