The liquidation of two Italian banks, Veneto Banca and Banca Popolare, this week puts increasing pressure on other banks in the Eurozone to reduce their holdings of bad loans, according to Fitch Ratings.

It remains to be seen however, whether securitization will play a significant role. Two large deals planned by UniCredit and Banca Monte dei Paschi di Siena have yet to launch, underscoring how difficult it is to either sell these loans or bundle them into collateral for bonds. If either is able to close deals in the near future, Fitch expects other banks may be more inclined to pursue the securitization route as a means to lessen their stocks of NPLs.

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