Italy's Banca Nationale del Lavoro (BNL) recently confirmed that it is working on a bad loan-backed securitization worth around Lit3 trillion ($1.63 billion). According to Davide Croff, the bank's CEO, the deal will be launched this year, but completed in the new year.
BNL has mandated a consortium of J.P. Morgan, Morgan Stanley Dean Witter and Paribas to examine the financing. If completed the deal will reduce BNL's bad loan portfolio by 18%.
"This operation forms part of the already existing plan to strengthen the bank at group level and will free up resources which BNL can invest in more profitable activities," Croff said.
BNL now takes its place in the long queue of Italian banks hoping to take advantage of the special dispensation included in this year's securitization law, which allows banks to treat securitizations of non-performing loans as if they have taken place over a five year period, easing tax and accountancy problems.
However, that dispensation is only available for a two-year period following the passage of the law in April, leading experts in Italian securitization to predict that next year will see issuance volumes from Italy of up to $15 billion.