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Report: Italian cooperative banking group to sell €2.5B in bad loans by 2020

Cassa Centrale Banca Credito Cooperativo del Nord Est SpA is looking to sell as much as €2.5 billion of nonperforming loans by 2020, Reuters reported, citing "a source familiar with the matter."

Hundreds of small Italian cooperative banks are set to merge and create three larger groups after a government reform of the sector, the Feb. 21 report said, adding that two of those groups — CCB and Iccrea Banca SpA — will go through an asset review later in 2018 as supervisory oversight moves to the ECB from the Bank of Italy.

The Bank of Italy reportedly urged the groups to clean up their balance sheets and be ready to increase capital if needed. The source said CCB intends to offload its soured loans in three transactions via outright sales and securitization deals, with the first tranche to be sold in 2018, and the second and third in early and late 2019, respectively.

The latter of those sales in 2019 would be worth between €500 million and €700 million, the report added.

In 2017, the cooperative banking group sold about €885 million in bad debt, Reuters said. The amount was well above the €500 million sale it projected a few months earlier.