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Luzzatti plans addition NPL sales in 2024

According to rumors circulated by Il Sole 24 Ore, Luigi Luzzatti Scpa, a consortium company of Italian popular banks, is reportedly working on the creation of an independent platform to sell directly to investors the impaired exposures of shareholder banks (and some external banks that typically join the multioriginator transactions promoted by the consortium), without the involvement of intermediaries or advisors.

This significant strategic shift is part of the path Luzzatti has taken in recent years to support the reduction of shareholder banks’ NPE ratios. The latest significant step in this process was the sixth multi-originator securitization of bank non-performing loans concluded in December last year.

For 2024, the consortium’s operational plan includes, the launch of a new securitization of non-performing loans and the execution of two non-recourse sales, one of granular unsecured loans by the middle of the year and one of single name secured NPLs and UTPs (the fourth such transaction carried out in the last 3 years), to be carried out in the third quarter. Both true sale transactions will be executed using the newly established platform.

Thanks to the work carried out by Luzzatti, Italian popular banks have made significant progress to date in managing impaired loans. With the introduction of the new “in-house” buying and selling structure, the consortium has the twin goals of lightening the balance sheet and increasing financial efficiency.

Nicola Luigi Giorgi, president of Luigi Luzzatti, in an interview with Sole 24 Ore, highlighted the importance of this initiative, which is part of a broader context of services and tools to support consortium member banks. After the first few years of operation, the goal is to strengthen the integration and alignment of shareholder banks’ strategies with consortium programs.

In 2023, Luzzatti has already seen an expansion of its scope, with the adoption of new regulations and the launch of joint initiatives to address sustainability and environmental, social and governance (ESG) challenges. The future includes increased collaboration with major shareholder banks, such as Banca Popolare di Sondrio, and expansion of the consortium’s direct services.

Luigi Luzzatti is also expanding its strategic planning and risk management services, with plans to launch new initiatives in the ESG area and improve compliance and anti-money laundering services. These steps are in line with the growing need to address regulatory complexity and meet regulatory obligations, especially for smaller banks, which face significant challenges in a complicated market environment.

Popular banks, faced with the obligation to update their business model and difficulties in scaling due to structural limitations, see collaboration and consortia as a way to maintain their autonomy and continue to serve their territories. The trend toward forming alliances, long suggested by bodies such as the ECB and the Bank of Italy, seems to be the option of choice to overcome these challenges and continue on the path of growth and innovation.

Entering Italian NPE Market

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