(Finance) – The European Commission has declared the Italian plan that allows to transfer certain loans guaranteed by the state to one newly established platform managed by AMCO, a company owned by the Ministry of Economy and Finance and a leading Italian operator in the management of impaired loans. The green light has come because the EU Commission has found that the Italian state will be remunerated according to market conditions and that the sale of the loans to the platform managed by AMCO and the granting of any new loans by AMCO will be carried out on market terms.
“This scheme will allow Italy to maximize loan recovery, reducing the impact of existing state guarantees on the national budget and the effects on borrowers with good prospects of profitability – commented Margrethe Vestager, Executive Vice President of the EU Commission with responsibility for competition policy – This is an important step towards the recovery of the Italian economy that does not involve distortions of competition “.
The assets concerned
Italy has notified the Commission that it intends to authorize banks to transfer approx 12 billion euros in the form of two types of loans: loans benefiting from a state guarantee initially approved in April 2020 under the temporary framework for state aid; unsecured loans from the same or related debtors.
The procedure
The scheme requires that the loans are first transferred by the banks to the AMCO platform and theirs price is based on offers from private investors. In exchange for the transferred loans, the investors, which can also be the transferring banks, will receive securities.
If the originating banks decide to keep all the securities, the price will be agreed upon among all the banks so that it does not benefit any loan portfolio. The price will also be verified by an independent third party evaluator. In any case, AMCO will not purchase any of these titles.
Once the loans are on the platform, AMCO will be responsible for managing them. “AMCO will focus on more complex loans and, for smaller loan portfolios, it will cooperate with private service companies – reads the note from the EU Commission – The remuneration of AMCO for these services has been compared with similar operations for which data were available on the Italian market “.
New financing and liquidity
AMCO can also provide new loans to some borrowers, which must be profitable companies only temporarily in difficulty. These loans will be granted by AMCO together with financing from private operators under the same conditions.
AMCO can ultimately deliver to the platform short-term liquidity support to cover mismatches between loan inflows and payments required for securities. These loans will be remunerated at an interest rate in line with market benchmarks.