Europe News

Published: September 20, 2017

UniCredit latest Italian lender to flush out bad loans

UniCredit has sold €17.7bn of bad loans to US investment funds Fortress and Pimco, as Italian banks continue their balance sheet clean-up efforts following the country’s profound recession.

UniCredit, one of the largest lenders to Central and Eastern Europe, announced the loan portfolio sale at the end of last year and finalised the deal on July 17. The Italian bank raised €13bn from a rights issue in February to make up the hit to its balance sheet from writing off the loans. 

The loan portfolio was believed to be sold at an average price of around 20 cents to the euro, according to a capital markets analyst who could not be named. 

UniCredit will follow up the loan sale by issuing asset backed securities by the end of July. The Italian bank will see its fully loaded common equity tier 1 ratio – a measure of a bank’s financial strength and solvency - increase by around 10bp, the bank said. 

UniCredit’s fully loaded common equity tier 1 ratio stood at 11.45% at the end of the first quarter of 2017. 

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