Intesa Sanpaolo’s board of directors has approved a €3.6bn partnership with the Swedish credit management firm Intrum that will enable the Italian bank to reduce its NPLs by €10.8bn.
Intrum will make an initial payment of €156m at the end of April 2018, while the remainder of the acquisition price is expected to be paid at year-end 2018.
Intesa, which had said in January it was in talks with Intrum over its bad loans, will offload now €10.8bn purchased by Intrum together with CarVal Investors.
Through the agreement, Intrum will control 51% of a company made up from the merger of Intesa’s NPL recovery business and all of Intrum’s current Italian operations, giving rise to a major servicer of NPLs in Italy that will manage some €40bn in soured debts.
This joint venture servicer enters into a 10-year exclusive servicing deal with Intesa Sanpaolo for the vast majority of the bank’s new NPL inflow during this period.
According to Intrum, Italy is one of the largest markets for NPLs in Europe, which highlights the importance of this long term strategic partnership.