“Italian banks expect a rising NPL wave”
Francesco Paolo Bellopede has been active as Country Manager in Italy for the Frankfurt credit marketplace Debitos since the beginning of 2019. In the interview he talks about the topics of the NPL&UTP congress in Verona, the cooperation of Debitos with doValue and the consequences of the Corona crisis for Italy’s banks.
Francesco, you were a participant of the NPL & UTP Congress in Verona (Link) a few weeks ago. What were the main topics discussed during the event?
The main topics discussed were NPL and UTP market trends with a specific focus on the Italian market. Banks, regulators, the ex-Ministry of Finance and financial investors involved in the distressed sector were present. I took part in a roundtable that covered the topics of UTP and new NPL platforms as secondary markets.
What consequences do Italian banks expect in the light of the current Corona crisis?
Italian banks expect a rising NPL wave – different sources estimate €60bn to €80bn. It is expected first insolvencies will happen in the 1Q/2Q 2021 depending on when the current moratoria by the Italian state on loans and other temporary subsides will be removed. As a result of the corona crisis, there are rumors on possible mergers between national big banks and the set up of national bad banks following previous examples. At the event in Verona, there was also hot debate about blocking calendar provision and new definition of default during the pandemic to avoid procyclical effects on the financial sector.
What role can NPL transaction platforms play in coping with an NPL crisis?
During our roundtable, Debitos and doValue highlighted that the launch of doLook was great help in managing an increasing number of new small deteriorated positions by using digital tools in a standardized and transparent auction process. The portal doLook started from 500 listings in May 2020 and it shows 11,000 listings as of October 2020. This shows that NPL platforms can be real assets when it comes to a possible new NPL wave due to the corona crisis. Furthermore, the platform can even reach a number of small to medium buyers of NPL positions by clustering the local NPL markets with a user-friendly and free portal inside the Debitos platform.
And what is the perception of the main stakeholders e.g. the European regulators?
The NPL transaction platforms were one of the main topics of a recent discussion at a European roundtable. The main regulators like ECB, EBA and the European Commission will probably recommend soon the adoption of standardized and transparent resolution mechanisms to deal with the increased NPL volumes due to the Corona crisis. There is strong attention from the main stakeholders like banks, loan servicers, funds and investors to this topic, especially in Italy where courts had been closed for several months in 2020 due to Corona. Extra judiciary resolution processes like credit sales by using transaction platforms could represent a win-win for sellers and buyers of single credits.
You can watch an interview of Francesco conducted by SkyTg24 financial journalist Mariangela Pira at the event in Verona here. (Language: Italian)