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Newsletter n. 20

UTPs are the new frontier of problematic loans in Italy

The Italian market for Non Performing Exposures (NPE) over the year 2017 and the first months of 2018 met expectations in terms of vitality and fervor. According to a study by PWC, with regard to Bad Loans, volumes lie at €165 billion (GBV) and €64 billion (NBV) as at December 2017. Their massive reduction has been driven mainly by a few mega deals of loans derecognition. A trend that continued over the first quarter of 2018.

But the new frontier of the NPE in Italy is more and more that of the UTP, problematic loans, but not yet suffering. Utp exposures reached € 94 billion (GBV). They Were € 117 billion in 2016. Industrial initiatives and the sale of UTPs were limited in 2017. Italian banks will therefore have to structure the industrial management of UtP in the best possible way and implement effective disposal plans. The growing attention to the UTP segment entails the application of greater real estate know how to manage loans and enhance the underlying real estate assets.

On the market there is therefore a process of concentration and strengthening of “service providers” dedicated to the valorization of NPLs and problematic credits (the so-called servicers) thanks to the entry of international capital, which bring know-how and recognized management best practices to global level.

A more efficient market, with growing international operators and capital, can only encourage greater transparency and dynamism, favoring the possible absorption of products, not only on the already highly sought-after metropolitan contexts of Milan and Rome, but also in different and more peripheral markets.

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