Banca Monte dei Paschi di Siena SpA signed binding agreements to dispose of €3.5 billion in nonperforming loans.
The Italian lender sold Project Merlino, a €2.2 billion portfolio of unsecured small-ticket and consumer credit NPLs to Fire SpA, Balbec Capital LP, Banca Ifis SpA unit Ifis NPL SpA and Credito Fondiario SpA. The portfolio was subdivided into four separate clusters based on the type or amount of individual exposures, with Balbec Capital acquiring the large cluster, Credito Fondiario and Fire taking the mid cluster and Ifis NPL acquiring the small and consumer clusters.
Additionally, Monte dei Paschi sold Project Morgana, a €900 million portfolio of leasing bad loans, to Bain Capital Credit. The bank also sold Project Alfa 2, a portfolio of €400 million in unlikely-to-pay loans, reducing its unlikely-to-pay loan portfolio by about €1.9 billion during 2018, compared with the annual unlikely-to-pay reduction target of €1.5 billion.
The sales of projects Merlino and Alfa 2 were completed in 2018, while that of Morgana will be completed in 2019. The transactions will have a marginal impact on the Italian bank's income statement in 2018 and will lead to a gross nonperforming exposure ratio of about 16% as of Sept. 30, 2018.