Henry Novelli

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Henry Novelli

Culture Blog - Jul 18, 2017

Atlante offer is set for the acquisition of 26 billion NPL from MPS

It seems after 6 months of bouncing between MPS and Brussels a conclusion was found in regards to Monte dei Paschi’s chapter and its heavy NPL portfolio. Atlante 2 has decided to continue alone in the acquisition after Quaestio, Fortress and Ellitott gave up due to conditions and price misalignment. It seems official, according to news agency “Il sole 24 ore”, that the acquisition offer was formalized on June 27th.

The offer involves the transfer to some securitization vehicles of the NPL at 20.5% valuation. It seems the final formal deed will be held in Siena on the 30th during the board meeting. The bank capital increase has been adjusted from € 8.8 billion to € 8.3. The state will proceed with the capital injection around month’s end (July).

As stated, Atlante 2 will buy NPL from MPS at 20.5%. The securitization will work as follow: 3.3 billion will be issued and guaranteed by the state with the Gacs, while 1.6 billion of Junior bonds will be bought from Quaestio. One year ago, Atlante and MPS engaged in the transfer of the NPL portfolio to the former at a valuation of 27%. Why was Atlante evaluating the securities 6.5 points higher? The answer lies in the due diligence valuation carried out from Credito Fondiario. The NPL’s value lost approximately 10% value over one year time, just to confirm the importance of time.

Now that Atlante 2 closed the deal, it is time to appoint the servicer who will monetize the outstanding bad debts. Among many, there is Credito Fondiario, Quaestio’s partner. The recovery operation will feature all the major Italian players such as DoBank, a Fortress subsidiary, as well as the recovery platform Juliet which was assigned in autumn to Cerved. Due to the commitment of Atlante 2 in buying NPL from MPS with every leftover resource, the other 2 billion rescue operation related to Casse di Cesena, Rimini and San Miniato might be compromised. As noticeable, the solution to a problem immediately creates a new one. The Italian banking situation is far from being solved and the mismanagement of banks will be relegated as always to taxpayers.