Italian non-performing loans might not experience the boom enjoyed in past years because, at the moment, there is little incentive for banks to tap the securitization market (see ASR 6/16/02). Still, reasonable growth in the sector and evolving NPL structures should keep issuance alive, according to Fitch Ratings analysts, who predict a revival as early as this year.
So far, a lack of incentive has curbed growth - banks don't have the same impetus to bring these loans to market as they did five years ago. The rapid development of the Italian NPL securitization market was largely due to the critical mass of NPLs on banks' balance sheets, and a favorable tax environment that allowed banks to amortize NPL-related losses over five years. The latter considerably softened the immediate blow a securitization might deal to financial results.