Intesa Sanpaolo SpA plans to dispose of up to 50% of a €10 billion unlikely-to-pay loan portfolio, the potential sale of which the Italian banking group is discussing with Prelios SpA, Reuters reported, citing three sources familiar with the matter.
In March, Intesa Sanpaolo signed a nonbinding agreement with Prelios, the Italian debt recovery unit of U.S.-based Davidson Kempner Capital Management LP, to review options to streamline the lender's portfolio of unlikely-to-pay loans. The two entities had been in talks over a potential deal for €10 billion in nonperforming property loans of the bank earlier in the same month.
The sources said that Prelios will now purchase only up to half of Intesa Sanpaolo's debt portfolio and manage the rest of the loans, which will remain on the bank's balance sheets. Prelios is also understood to be holding talks with other companies that could get involved in the management of the loans, the sources added.
The Italian lender, which is aiming for a total lending ratio of 6% by 2021, had €14 billion in unlikely-to-pay loans, or 8.5% of total lending, as of March 31. In April, CEO Carlo Messina said the bank is expecting to finalize the discussions with Prelios by the start of July.
EY serves as a financial adviser on the deal, according to Reuters.