My New Column on Be Bankers
On Credit Management Industry
Weekly updates on Credit Management Industry on line on Be Bankers starting with a review of the proposal on NPL and a stable outlook on NPL market according latest IFIS Market Watch
A number of rumors circulated since July about a possible legislative initiative by the government to offer certain types of insolvent debtors the possibility of paying off their exposure against payment of a legally defined amount significantly below face value caused quite a few concerns among NPL investors. The reaction of most industry players and independent observers has been negative and has spread from social networks and independent blogs to the research papers of rating agencies.
The greatest attention and widespread concern among market participants stemmed first from the assumption that such measures could be included in the August 10, 2023, Decree Law No. 104 (the so-called "Omnibus Decree") and later from the prospect that they will be more thoroughly rediscussed by the Italian government and possibly translated into law or included in the 2023 budget law.
Although the details differ among the different proposals, the most recurring structure envisions that, in the case of non-performing loans sold within a given time frame, the debtor would be granted the possibility of being released from its debt by paying an amount parameterized to the sale price of the relevant loan, plus a surcharge of between 20 percent and 40 percent.
Read the Full Article in Italian on Be Bankers
On Friday, September 22, 2023, Banca Ifis presented the new edition of its "Market Watch Npl" with estimates of key trends for the three-year period 2023-2025. The rate of deterioration is expected to remain at historically very low levels, even compared to the values prior to the sub prime mortgage crisis of 2008, against NPE transaction volumes in line with those recorded in recent years.
Against a gradually deteriorating macroeconomic backdrop, the resilience of the world's major economies has been based on large fiscal stimulus and positive private consumption dynamics. During the first quarter of 2023, the NPE ratio of the EU remained unchanged as a proportion of total loans compared to the end of 2022 (1.8 percent in both periods), while the forward-looking indicators (Stage 2 and Performing Foreborne) of the major EU banks are gradually improving, although they remain at a higher level than in the pre-Covid period. Therefore, the riskiness of the EU's significant banks appears to be decreasing.
Although Italy has a higher prospective risk than the EU average, even for Italy, prospective indicators show an improvement in Q1 2023 (Stage 2 ratio from 12.2 percent to 11.3 percent and forborne performing from 1.59 percent to 1.41 percent). In this regard, Italian banks continue to maintain a more cautious attitude than the EU average, as evidenced by the above-average levels of coverage rates on both types of loans
Read the Full Article in Italian on Be Bankers
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